Looking Deeper at Cloud Costs and Security

Ventana Research recently published a paper titled “Cloud Financial Performance Management: Ready for the Large Enterprise”. In it they found that 54% of companies with employees over 1000 users are already using the cloud, and that only 14% have no intention to use it. That’s an astonishing rate from just a few years ago.

However, when it comes to running analytical applications such as Corporate Performance Management (CPM), 59% said they prefer on premise deployment. Why the big discrepancy?
In this study the number one reason is security, with 56% citing it.

I find this to be amazing given the great benefits of the cloud - cost savings, IT focus, faster deployments, and automatic and often free upgrades.

Cost Savings Iceberg

The cost savings of a cloud solution is very large, but often people look just at the monthly fee for software and compare it to the license fee + ongoing maintenance costs (the iceberg tip).  This is often because this is often the piece that comes out of their budget. This, however, doesn’t reflect the vast savings in time and resources on the IT side, and the productivity gains on the business side.

When comparing on-premises to cloud you should minimally ask:

  • How much is the infrastructure cost to run in house?
  • How many IT resources does it take to run?

These are the basic questions, now let’s ask a few deeper ones not often thought of:

  • How much does it cost to continually scale the infrastructure to meet growing demands?
  • What is the testing involved when we upgrade a database version or operating system?
  • What is the performance impact if they are not upgraded regularly?
  • How much time and resource does it typically cost when we do an application upgrade?
  • Is there a queue of IT projects and where does this one sit?  
  • How much is the security software we put in place to secure the application?

You get the picture. The costs are way deeper and bigger, as are the potential cost to the business for not keeping the application current and on the latest infrastructure.

Secure or Not?

The last question listed above leads right to the biggest concern of large organizations and the cloud - is it secure?

Data security is a serious and valid concern - for any IT application. In 2013 there was a 30% increase in reported data breaches, and in 2014 they are up 19.1% year over year. So the threats are real.

But is having an app on-premises more secure than on the cloud? I know it FEELS more secure, since it is in your house. If you look at those data breaches though, you will see the vast majority happen ON PREMISE, and not on cloud services. Remember some of the big ones - Target, JC Penney, Adobe? All from systems that were in their own houses.

I am going to say here, as does Ventana in their paper, that cloud apps are typically much more secure than those in organizations. Why?  Cloud vendors are squarely focused on security, as it is the lifeblood of the organization. IT resources in companies have many, many responsibilities and cannot focus the attention on it as we do. We deploy all the latest security technologies, and the security is tested regularly by outside firms (penetration testing). We then go the extra mile to get certified by 3rd party auditors for standards such as ISO 27001 and SSAE 16. Most organizations do not spend the amount of time and resources on security as most cloud vendors do.  Are there exceptions? Of course. And you should be sure to do your due diligence on every vendor you are looking at.  But as a whole I stand by this statement.

I also have some first hand experience. I used to work for a company that provided security solutions to organizations. You would be shocked at the state of security in these very large companies. They will remain nameless to protect the not-so-innocent, but believe me I stopped using my debit card to shop a long time ago. 

Don’t Alter Requirements to Fit the Cloud

One last thing, if you decide to look for a cloud solutions be sure not to change your requirements to fit the limited functionality of some pure-play cloud vendors. You should not compromise on capability or scalability in order to move to the cloud. In fact, you should be looking to advance your performance management goals.

Take a look at Randstad - the second largest provider of HR Services in the world. They moved from their on-premise legacy systems and are now doing complex consolidation and planning with more than 300 users on the cloud. And they are a $22 billion company.

If you are looking at a corporate performance management solution, I suggest you seriously consider a cloud option, and consider the true cost and security concerns as you do. You may see it in a new light.

What are your thoughts? Do you use cloud for your financial applications? Are you concerned about security?


Share this post!