Benefits and Risks of Adopting Cloud-Based Services

Benefits and Risks of Adopting Cloud-Based Services

More and more, businesses of every size are transitioning to cloud-based services. This allows them to trim expenses, grow faster, and better serve their clients. Cloud service providers (CSPs) offer rich capabilities, enhanced data backup and protection, and can scale to your company’s needs. However, they aren’t a one size fits all solution. Cloud-based services have certain risks and limitations that you need to be aware of before making the transition.

The Benefits

Cloud-based services offer your organization a wide variety of capabilities that it may not have now. They can free up resources, streamline security updates, lower expenses (after initial investment), and remove the headache of maintaining physical spaces and hardware.

Subscription-Based Services

Instead of investing in a one-size-fits-most suite of services and equipment, you can select only what your business needs. As your needs evolve, getting more features and functionality might be as simple as ticking a box on an online form. The cloud service will handle the rest.

Scaling of Services

With the right plan, your business’s services can rapidly and automatically scale to meet demand. If your company has a sudden surge of interest from clients, you’ll be able to meet that without wasting time getting more equipment and services. This wasted time could result in the client moving on to a more agile competitor. One common scenario is for a company to need more storage capacity suddenly. Instead of having to purchase more equipment, you may be able to upgrade to another tier in your cloud plan.

Meanwhile, if your company experiences a slower period, you won’t be paying for services and capabilities that aren’t being used. This can improve your bottom line, particularly for businesses that experience seasonal variation in demand. It also allows your company to better weather difficult periods in a changing marketplace.

Data Backup and Recovery

It is essential to back up your data and be able to recover it if something unfortunate happens quickly. Many cloud service providers offer this as part of their packages. You can decide how frequently to back up files and which data is prioritized. This feature can give you peace of mind and make your business more robust in the face of harsh weather, cyberattacks, and more.

Cloud services may also be backed up and restored from anywhere. If trouble strikes while you’re on vacation, you can still manage this emergency via your smartphone or laptop.

Reduced Server and Business Costs

One of the most evident benefits of cloud services is that they’re not tied to any physical location. Off-site servers and on-site records departments are a significant line in a company’s budget. These must be rented or bought, licensed, brought up to code, and involve numerous miscellaneous expenses like electricity, cooling, and cleaning. Switching to the cloud

Agile IT Services

The traditional model involves your own IT department staying abreast of changing tech and coming privacy threats. They may need to procure or develop programs in response to these matters. This will then need to be implemented, often manually, throughout your company. After implementation, your company will face regular expenses of software and infrastructure maintenance.

Cloud-based IT services take on much of this burden. They may include automatic software integration, security upgrades, and troubleshooting. This frees your IT department to focus on everything from day to day troubleshooting to big-picture projects in development.

Cloud Security

When much of your company’s data and client information is located in the cloud, security becomes a critical concern. In the old days of paper files, you would need to secure your file room from intruders and worry about it during break-ins and natural disasters. When your information is based on the internet, it is potentially accessible by people around the world.

One of CSPs’ biggest priorities is to protect your vital business data from current and future threats. They keep an eye on the ever-changing landscape of technology, usage, and hackers’ strategies. At every step of the way, the CSP is working to maximize your cloud security.

Risks and Limitations

All business opportunities also carry risks and limitations. It’s essential to understand what CSPs can’t do and what risks you take on before making a transition. When you move to cloud-based computing, you give up direct control over some aspects of your security. However, your organization will still be held accountable by clients and the government for protecting data and adhering to the law. So before you sign on with any CSP, here are a few risks and limitations to think about:

Transition Expenses

Transitioning from traditional to cloud-based services can take time, money, and temporarily divert employee labour. It may require you to move on-premises IT, review and consolidate the programs you’re using, and standardize services. Employees may need to be retrained or take a refresher course on operating theses systems. The hours, money, and effort involved here vary from company to company. You’ll experience a smoother transition if you plan for this period ahead of time.

Regulatory Restrictions and Legal Requirements

There are a wide variety of laws in place governing data privacy. Some commonly known ones include:

  • Canada’s Privacy Act
  • The European Union’s General Data Protection Regulations
  • The Personal Information Protection and Electronic Documents Act
  • Direction for Electronic Data Residency
  • The Health Insurance Portability and Accountability Act

For companies with a strong international presence, this can become quite a complicated situation. As an example, think about a Canadian citizen working in the United States and accessing cloud computing services where the data is housed in the EU. In this scenario, the company may need to follow the data protection provisions of all three areas. You’ll want to have your legal and IT departments investigate which regulations you fall under and come up with a plan to stay fully compliant.

Less Direct Control

Cloud-based services may handle many functions that your company used to deal with by itself. Although this is one of the advantages that we’ve covered above, it does mean that some control is out of your hands. For instance, you won’t decide which data security upgrade to invest in. The CSP will determine that. This is another reason to choose a CSP carefully and make sure it’s a reputable company that you mesh well with.

Internet Dependent Services

It probably seems obvious that if much of your data is located on the cloud, you need fast and reliable internet to access it. However, no matter how reliable you believe your connection to be, it could fail. This might be due to cyberattacks paralyzing your CSP, natural disasters, terrorist attacks, or something as simple as brownouts in the power grid.

These possibilities, however remote they may seem, could all create service interruptions and data loss. It’s a smart move to factor this into your planning process to reduce potential damage to our company.

Communication Confusion

What happens if there is a software failure or security incident? A new structure like cloud-based computing can result in confusion on the employee and company level.

Who is responsible for what part of the business operation? What are their responsibilities? When should your in-house IT department be called, versus contacting the CSP? Creating and explaining clearly defined roles and responsibilities can cut this problem short.

Security Risks

We’ve touched on this earlier, but cloud services can create opportunities for security risks. A less reputable or experienced CSP may fail to adapt to a growing threat, miss a critical update, or otherwise contribute to a gap in your data security.

Unscrupulous people can exploit that gap to create numerous problems for your company. This is why it’s critical to choose the right CSP to work with. Look for a company that has an excellent reputation, works well with you, and takes your security concerns seriously.

However, there’s another side to this coin: your employees. Ultimately, keeping data secure involves a partnership between your company and the CSP. Your employees need to be educated on how to access and use cloud services securely. One simple mistake, such as jotting a password down on a piece of paper, could lead to a data breach.

You may also discover that you lack security personnel with deep familiarity with cloud-based applications. This will need to be addressed via training, hiring more staff, or more creative solutions.

On a more positive front, cloud services tend to be streamlined for easy and intuitive use. Most of these programs and services are straightforward to teach and learn. Some CSPs even offer training demos and troubleshooting during the transition phase. Finally, if there is a security error, you can reach out to the CSP for help in identifying and correcting the problem.

Manage Risks Through the Smart Selection of Cloud Services

The best way to manage both inherent and potential risks is through a structured approach. This includes screening CSPs carefully, clearly defining roles and responsibilities in service agreements, and reviewing and upgrading your security controls.

Choosing a CSP is an involved process that’s worth an article on its own. In brief, you’ll want to start by considering your company’s needs and what you’re willing to budget. Next, take a look at what’s out there that might be a match for your requirements. Is the CSP brand new, or does it have years of experience? What’s the company’s reputation? Has it been named in a data breach or other problem?

Money is another practical concern here. Are you able to get the features you need within your budget? The cheapest option may not be the best choice. What about other services? Many CSPs offer tiers or packages. If your growing business requires more services or data storage, what will that cost? How quickly can these upgrades be implemented?

Finally, consider how well you communicate with the company. Do they respond quickly and courteously? Can they give you clear and satisfactory answers to any questions you may have? If you’re going to be potentially working with the CSP for years, make sure that the company is a good fit for your business’s needs and your communication style.

Data residency is another critical consideration. As we discussed under ‘regulatory restrictions,’ where your data is housed and where it’s accessed from determines which regulations you’ll need to follow.

For small companies with a local presence, this is something to be conscious of but may not be a significant concern. You can keep things simple by having your data housed in your home country. Just stay aware that you may need to adjust your security and data use as your business grows.

For a large company, you’ll want to put your legal and IT team on the case to understand which laws you fall under and how to stay compliant. These teams, along with your CSP, may have suggestions on how to simplify your legal status.

Service agreements are another excellent opportunity for untangling a potentially confusing situation. Look for a document that defines roles and responsibilities. It should also describe what performance you expect from the CSP. There may also be mediation clauses or financial penalties for under-performance.

Finally, an overall review of security protocols can help you protect your assets. Is valuable client data stored safely and securely? Have your employees been educated on how to securely and adequately access new software? Do you have redundant systems in place in case of user error? What is the plan if there’s a natural disaster where your data is being stored, and the power goes out? These are all vital questions to answer before you transition to cloud-based services.

The Bottom Line

Switching to cloud computing is a big decision that could boost your company’s growth and streamline productivity if you do it the right way—Screen CSPs for the right fit. Investigate the pros and cons of the services you’re interested in. Careful planning now can pave the way to a smooth, painless transition into the world of cloud-based services.

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