The era of self-managed, in-house server rooms is slowly fading as more and more critical business functions are being moved off-site and into the cloud.
Seeking smoother operations, improved customer service, and boosted revenue streams — not to mention, the flexibility to manage increasingly important remote workforces — businesses of all sizes are migrating their data to computers controlled by third parties that are accessible 24/7/365 over secure internet connections.
More Businesses Are Moving Data Online
Ubiquitous broadband and a thriving and competitive marketplace for cloud services has made the storage and delivery of data over the internet commonplace and highly secure.
The Global Advanced Threat Landscape 2019 Report by information security company CyberArk found that nearly half of respondents had move critical business applications to the cloud, including:
- Customer-facing Applications
- Data Warehousing
- ERP (Enterprise Resource Planning)
- CRM (Customer Relationship Management)
- Finance and Accounting
39% said they used the cloud for internal development; 45% indicated that even sensitive customer data that was subject to regulatory oversight was stored in the cloud.
Every business has its own unique challenges and risk management approaches to grapple with before deciding the time is right to move to the cloud, but here are the general pros and cons that should be considered:
PRO: Cost Savings
Data centers are expensive. They require advanced equipment that needs continual maintenance, monitoring, and upgrading, as well as trained experts to manage them. There is also the cost of powering those machines and keeping them cool, which can be substantial.
Plus, figuring out exactly how much capacity your business will need in a given time period can be difficult and costly if you get it wrong: Under-resourcing leaves you struggling to keep up with demand, while a glut of capacity results in wastage. With cloud-based data, by contrast, you only pay for what you need. Payment schemes vary, but contracts are typically based on the features, storage, number of users, and/or time that is actually used.
For a variety of reasons, everyone loses their internet connection once in a while. Businesses that have their data on-site can continue to work through an outage. Those storing everything in the cloud have fewer options. Consider a wholesale and distribution company that stores its inventory software and ERP solution in the cloud. If their internet service goes down, their entire operation grinds to a halt.
Some cloud services, however, such as Dropbox and Google Drive offer offline sync and access features. Employees can choose certain important files they are working on and store a copy on their hard drive. When internet access is restored, the cloud copy is immediately updated.
Additionally, even the best cloud service providers sometimes have outages of their own. But thankfully, they are quite uncommon. According to Gartner and Krystallize Technologies, in 2018, Amazon Web Services, Google Cloud Platform, and Microsoft Azure, the three largest clouds, had all achieved uptimes greater than 99.9%.
According to Verizon’s 2019 Data Breach Investigations Report, 43% of cyberattacks are targeted at small businesses. Many firms never recover from a breach. Every cloud platform has its own security protocols, but almost across the board they are implementing incredibly robust controls for identity and access management, often requiring extra layers of protection like multi-factor authentication.
Yet, a note of caution is warranted because many businesses are under the mistaken assumption that enlisting a cloud provider and moving their data off their own servers relieves them of any role in avoiding threats. Most clouds delineate what Amazon calls a Shared Responsibility Model and Google refers to as a “Customer Responsibility Matrix,” which are security behaviors they require from their customers (e.g. enabling encryption, classifying assets, and proper usage of identity access management tools).
CON: Bandwidth Needs
Storing essential business data in the cloud, as opposed to local hard drives, will result in increased internet usage. For businesses that aren’t moving around large files regularly, the uptick will be minor. But for firms that need to transfer large files (e.g. video production companies), so much dependence on the internet might be a deal breaker — as might be the requirement of a heavier investment in internet infrastructure that still might never yield the performance of local storage.
PRO: Remote Work
Even before a global health crisis shifted millions of employees into remote work, the flexibility and advanced collaboration tools associated with storing data in the cloud made it a desirable option for businesses. When data is available online, employees can access it anywhere from a variety of means, including mobile devices. Not only does that open up new options for workers, it can help cut costs because businesses find they require fewer workstations as more people use their own smartphones, tablets, and home computers.
CON: Regulatory Compliance
Certain industries, like finance and healthcare, impose far-reaching restrictions on how data is stored with third parties like cloud service providers. Furthermore, governments around the world have passed laws like the EU’s General Data Protection Regulation (GDPR) intended to protect the privacy of their constituents. It’s very important to ensure you’re not running afoul of any relevant laws before migrating sensitive data like personally identifiable information or health and banking records to the cloud.
When a business has an opportunity to rapidly grow, or needs to reduce its footprint in a particular area, they are often stuck with their existing digital infrastructure, which might not be an optimal fit for their new direction. Cloud services solve that problem easily. They are sold with scalability in mind. If you need more or less space, computing power, or access for users, making that change is a seamless and almost instantaneous process.
The computers your data is stored on in the cloud will almost certainly be holding data from other firms as well because most cloud services operate on a multitenant system. That framework helps them more efficiently utilize their resources but it can open you up to problems should data from another of their clients inadvertently mingle with yours. Make sure strict access controls, like individually partitioned servers and full encryption of data at rest and in transit, are in place to minimize that risk. If any risk at all is unacceptable, contract for a dedicated or bare-metal cloud instance that only your firm utilizes.
PRO: Disaster Recovery
There’s a widely held principle in data backups called the 3-2-1 rule. It states that you should keep three copies of all important data: two in different storage types (e.g. hard drive, tape, optical disc) and a third that is offsite. Cloud data services satisfy the offsite requirement, protecting your data so that even in the event of a major disaster like a fire or other calamity that physically destroys your first two copies, the third will survive.
An increasing number of businesses have gone even further, shifting their entire backup plan to the cloud. That exposes them to some additional risk because even professionally managed server farms aren’t immune to data disasters, but the speed and ease with which they enable full recovery from data loss prevents costly, extended downtime.
Businesses that control their own networking hardware don’t usually have to worry about whether their data and applications will run properly. They built the system for that particular usage case. Cloud services are highly customizable but not as bespoke. As they become more prevalent, the number of data types they are capable of managing is expanding, but due diligence requires checking that your data and the systems of your chosen cloud provider are compatible.
In a marketplace that moves at lightning speed, companies that innovate faster and adapt more easily to changing circumstances have a distinct advantage over competitors still doing things the old way. Moving data to the cloud isn’t right for every business today, but for a vast and growing majority, the pros outweigh the cons.
Furthermore, cloud decisions aren’t binary. It is possible, and usually sensible, to use the cloud for certain resources, but not others. Choosing to leverage cloud resources is ultimately a decision that should be tailored to each individual business, and the cloud should be used as a tool that intelligently and cohesively meshes with an overall IT strategy.