When searching for enterprise business software, one choice to make is whether to implement an on-premises solution or cloud-based software/hosted solution. Certain vendors may only offer one implementation option which can help narrow down your search if you have a preference. If you don’t have a preference though, there are certain factors that help make the case for one over the other – for example, your company size, existing infrastructure, business processes, available IT resources and growth projections. For small-medium size organizations, the disadvantages of on-premises tend to significantly outweigh any advantages. For example, on-premises requires a significantly higher upfront investment, hardware upgrades, security and maintenance must be taken care of internally by your company or outsourced to a 3rd party and physical space is required to actually house and run the system. This is why on-premises tends to make more sense for larger organizations with a dedicated team of in-house IT people. Deciding which method is best for your business can have a significant impact on your processes down the road and so the decision should not be made lightly. This is also why it is important to fully understand the differences and especially what the term “cloud” means to your software vendor of choice. Deciding against a cloud implementation because you do not have a clear understanding of the technology or because you don’t “trust the cloud” should not be a valid reason to choose on-premises and can ultimately hurt your business. Below we outline what cloud-based software implementations entail to help you make an informed decision.
What is cloud-based software?
Often used interchangeably with the term SaaS (software-as-a-service), and hosted, cloud software is a deployment method whereby a customer accesses a software solution off-premises via the internet and pays an ongoing subscription fee to the software provider. The software itself physically lives on the vendor’s hardware and so system maintenance, upgrades and backups become the responsibility of the vendor. Even if you have not implemented cloud-based solutions as part of your business processes, you’re most likely utilizing them in your personal life. For example, programs like Netflix are cloud-based solutions – users pay an on-going monthly fee to access software and applications hosted on servers and computers off premises. To elaborate further:
Cloud Computing – Refers primarily to the fact that the software is physically located off-premises and accessed via the “cloud” (internet).
SaaS - Refers primarily to the payment method of accessing software whereby a customer pays a vendor an on-going monthly or yearly fee for access.
Hosted - Refers to the fact that the software provider is responsible for managing the software and the hardware that it is installed (hosted) on.
How do you access the cloud?
If you have decided to consider cloud-based solutions as part of your software search, keep in mind that different vendors have different means of accessing cloud-based solutions. One common method is a browser-based system in which a user types in a URL and then enters login and password information to use software via a specific website.
Another option is to connect to software via an RDP connection. RDP stands for “remote desktop protocol” and is a Microsoft licensed technology available for a large range of computers, tablets and other devices, including most Windows and Mac computers, iPads and iPhones, Android devices, and systems running Linux or Unix. Essentially, RDP allows a user at a remote computer to log into a server or a specific computer on a network over an internet connection. Once logged in, the remote user has access to that server or computer as if they were sitting in front of it. An RDP Client is the software program, or app, that’s actually installed on your computer, tablet, phone, etc. – most commonly referred to simply as Remote Desktop – to run all kinds of software programs which physically reside on one or more servers somewhere else and not on your computer or device.
In general, there are a lot of benefits to both of these approaches - like being able to access a Windows program from an iOS device or a Mac, or being able to run software that requires powerful processors and lots of memory from a minimally configured workstation.
Where is the information stored?
With cloud-based solutions, the software you’re accessing and data stored within that software will typically reside on servers housed either by your vendor at their physical office space or, more likely, at a dedicated data center. Data centers are essentially storage spaces for servers and hardware. Any given data center will have servers on site with information from a variety of different places – they could house servers with sales data from a wholesale distribution business employing cloud-based ERP, they could house servers belonging to government bodies with administrative information, and they could house servers with financial information being stored from other businesses around the world. Geographic consideration is also important for software vendors who store their data and their customer’s data outside of their organization. For example, some businesses have data centers located on both the East and West coasts of North America to further mitigate risk in the case of a geographical catastrophe or event.
Given that data centers are in the business of keeping data safe and secure, they will have their own processes and security measures in place in conjunction with what a software vendor has. Specific measures offered by both include:
Redundancy - In order to ensure the highest level of security possible for your data, most data centers and cloud providers will have a number of fail-safes in place. These can include multiple power supplies, processors and hard drives per server and multiple data back-up locations. A bonus is the option to keep a copy of your data in-house as well.
Automatic Fail-Over - A proper hosted solution will employ back-up servers that immediately take over if one were to fail. This means that in the event of total server failure there is always another server to take over the task of running your business.
Data Centre Security - A good data centre will offer multiple levels of security for physical entry to the building such as Biometric scanning, PIN code, access card etc. and 24/7 monitoring to ensure the servers and data are secure.
Disaster Prevention - Back-up power generators as well as state-of-the-art fire detection and suppression systems are all imperative in buildings where servers are being managed.
Who owns the data?
Although with cloud-based solutions your data is physically located outside of your organization, it is still owned by your company. Backups can also be deployed locally and in the event that your business decides to move systems or close operations, it should be very easy to get your data back from the vendor in question (assuming they are willing to cooperate). Some concerns that arise from cloud-based solutions concern the geographic location of the data. If data is physically located in a different country, it may be subject to laws of access different from those in your own country which leads to the very legitimate fear that a foreign government may be able to legislate its way into your confidential business information. However, just like there is a risk of storing data onsite if you do not have the proper security measures in place, the risk of your data living in a different part of the world must also be assessed. Keep in mind that storing information locally may also be subject to access from governments and other regulatory bodies – information on the cloud is not the only information that can be accessed. When all is said and done, you must consider the sensitivity of your data, and weigh the pros and cons of each area of risk to make the best decision.
So is your data safe?
From the above information it is clear that there are several benefits to choosing cloud-based software. There is no large upfront cash outlay, infrastructure costs are pushed to the provider, you receive increased access to expert support (in lieu of an IT department), and don’t have to worry about backups. But one of the biggest benefits of employing a hosted solution is that your data is often far safer than it ever would be if you kept it on-location at your place of business. Ultimately when it comes to data safety, there are two main areas of concern: (1) security and the act of managing risk, and (2) privacy and the appropriate use of information. When it comes to security, most small/medium size businesses are not equipped with the proper level of disaster prevention systems, nor do they have the same level of safety measures in place at their different locations. The implied benefit with a hosted solution is that, if your entire business was to encounter a disaster such as a fire, your system would still be accessible and all your data would be safely running in the data centre. When it comes to data privacy, this will depend on the vendor you work with and the country in which the data lives. To further protect against privacy concerns make sure to check that sensitive information is being encrypted by the cloud vendor and conduct a privacy assessment. Although it will be rare that all the data you manage will require the same form of privacy, it is important that sensitive data gets encrypted to prevent access from outside parties.
The Future of Cloud
Cloud-based technologies have been around for a while and will continue to grow in the future. According to one study, the global SaaS market is projected to grow from $49B in 2015 to $67B by 2018. When all is said and done, you have to choose a solution that makes the most sense for your business – whether that is cloud-based or on-premises. Finding a vendor that offers both options gives you more flexibility upfront and down the road should your mind (or business processes) change.