Have you ever participated in one of those corporate team-building exercises designed to build trust? We're picturing the one where your team members stand behind you while you fall straight backward into their (hopefully) supportive arms.
For some of us, moving data to the cloud is like that exercise. The crux of our fear is that the cloud ultimately is not secure.
When we say “cloud computing” keep in mind that we’re talking primarily about the public cloud infrastructure, where your data is stored with one of the primary providers such as Microsoft or Amazon.
Using the Internet to access data stored on someone else’s servers may be exactly what your business needs to keep up with the competition. On the other hand, the risks may outweigh the benefits for your type of business.
We believe the advantages and disadvantages of cloud computing are fairly clear-cut. Let’s weigh the options.
Some Possible Advantages of Moving to the Cloud
1) Cost Savings
Probably the number one reason to move to the cloud is to reduce costs. Traditional enterprise-businesses often don’t think twice about coughing up the cash necessary to build an on-premise hosting facility. But small to medium sized businesses often can’t afford these upfront expenses and the maintenance required to keep the system up and running.
Here are some of the typical costs associated with on-premise hosting:
- Infrastructure includes all the hardware and software required to get your data center up and running. But the costs here are fuzzy to calculate, because, while a single computer can cost X for your on-premise facility, cloud-based hosting includes the equipment and the staffing to maintain it.
- Equipment amortization also has to be calculated over time, as the infrastructure ages, breaks and must be replaced or upgraded.
- Electricity usage is increasingly being recognized as a significant cost of on-site deployments. Servers use hefty volumes of industrial kilowatts (kWh), which cost hundreds or thousands annually. According to the National Resources Defense Council, U.S. businesses pay $13 billion each year in data center electricity bills.
- Utilization must also be considered. In the cloud, you pay for what you use. With an on-premise hosting facility you must accurately plan for how much space you’ll use over time. If you build your own server infrastructure, you pay for the equipment whether it’s a full capacity, or sitting empty. CIO suggests that about 25% of on-premise hosting facilities are consistently being utilized. This suggests strongly that most enterprises are losing money on hosting equipment they’re not taking full advantage of.
- Software license fees for on-premise usage are notoriously expensive when compared to pay-as-you-go cloud plans.
- Staffing an IT team to build and maintain the architecture can add up to an expense potentially as high as the equipment they’re servicing. Having a specialized server administrator, or staffing an IT help desk for employees takes some serious person-hours that can add costs quickly.
2) Access
On-premise hosting must take into account a critical action plan in the event of catastrophic systems failure. Businesses say they’re migrating data to the cloud because of the redundancy and resiliency found in Microsoft (and other providers) massive server farms. Data is migrated to another location seamlessly in the event of a natural disaster or man-made crisis. This is a benefit particularly for small to medium sized businesses who rarely have a dedicated IT team to help protect and defend corporate data in the event of a crisis.
Access also means having the ability to reach the data when you need it the most from any location. This is crucial in today’s mobile business environment. If you have a digital connection, it’s easy to reach the data.
Access can also mean scalability. If your business increases, you can add additional storage space or log-on access for SaaS (Software as a Service) applications like Microsoft Dynamics. Access also means you can scale up or down just about as quickly as you can set up a new login.
If business takes a downturn, you can dial back services. This is the heart of scalability in the cloud and it has forever changed how small businesses compete with large enterprises. Now, a mid-market business can have the same access to data storage options and the tools and services typically only available to enterprises businesses.
The cloud is the great equalizer between small and large businesses.
Some Possible Disadvantages of Moving to the Cloud
1) Security
According to the BBC, less than 10 percent of the planet’s data is currently stored in the cloud. Many IT executives say they can’t trust an external provider to keep their data secure. Interestingly, many IT executives say their concern is less about where the data is stored but more focused on the security of how it gets there.
Cyber security will be the biggest trend to watch in 2017, particularly after the massive DDoS attack that took down Dyn late last year. It crashed Twitter, Netflix, CNN, and other massive Internet sites and awoke the world to the danger of the Internet of Things (IoT).
The IoT includes small devices embedded in everyday equipment that transmit data through a Wi-Fi connection to the device owner. This could include your DVR player, refrigerator, or car. Hackers find vulnerabilities inherent in these devices – with the DDoS attack as the end result.
Despite these challenges, cloud security was edged out as the top concern of IT professionals in 2016. That’s probably because the simple truth of cloud computing is that there is no single vulnerability where hardware failure can occur in the cloud. If you’re talking about risk, the truth is that it’s higher if you’re operating on-premise.
The Microsoft website is a great resource for researching the validity of claims that cloud computing is simply not safe. Microsoft complies with industry-specific standards and implements a policy called “assume breach,” which helps them stay one step ahead of the latest potential security threat. The network includes firewalls, LANs, and a physical separation of back-end from front-end processing. All communication and operational processes are encrypted – in the same manner as banks and other financial institutions.
Amazon Web Services says they have over 1,800 active security controls in place. Their servers span 12 global regions, so the storage they offer is redundant. They brag of more than one million customers accessing their data center each month, which clearly points to the trend that attitudes about the security of cloud computing have surely shifted.
Many of these cloud providers now allow companies to control their own encryption keys; which allows them to completely handle who has access to their data.
So is cloud computing actually safer than on-premise hosting? The answer really depends on the skill and aptitude of your own internal IT department. Most of the major data breaches that have been publicized over the last several years have been in on-premise data warehouses, including Sony and Target.
What’s Trending in Business – On-Premise or Cloud Hosting?
The cloud is a relatively new and growing phenomenon in the world of computing. However, all signs are pointing to enterprise businesses joining the small to medium sized businesses in the cloud. Cloud deployments of Microsoft ERP and Office 365 mail software is expected to increase from $8.7 billion in 2015 to $34.9 billion by 2019.
While industry-specific segments like government or financial organizations may never move to the cloud due to regulatory requirements, it seems that many other types of businesses have begun migrating their data as a strategic approach to snare some real benefits from cloud computing.
With that noted, Capital One announced a reduction of internal data centers from eight to three by 2018. Where's the data going? To Amazon Web Services. It's true that cloud storage and SaaS continues to evolve. This is just one example of how more traditionally conservative businesses recognize the true value of cloud computing.
IBM is boldly predicting an escalating environment of cloud migration across all industries, with many businesses eliminating their on-premise hosting facilities. Further, they say the majority of cloud adopters will select the public cloud over private or hybrid models. In fact, hybrid models (where some data is in the cloud and some on-premise) are just the stepping-stones toward full cloud adoption.
A Gartner 2016 press release stated, "By 2020, a corporate ‘no-cloud' policy will be as rare as a ‘no-Internet' policy is today." But for this to happen, traditionally conservative organizations from finance and banking, government or health care must start their migration. As more businesses of these types follow the Capital One example, the dominoes will really begin to fall. A mass cloud migration is expected – as early as this year.
Conclusions from the Cloud
While there are obviously advantages and disadvantages of cloud computing, IES believes that the inevitable migration to SaaS and cloud-hosted services will continue. The key to this trend will be the selection of a trusted advisor to make your transition seamless and effective. Contact us today to find out how we’ve helped businesses just like yours reap the maximum benefits of computing in the cloud.
