Data is to a company what oil is to a car — an essential resource that affects every component. Companies rely on data to provide visibility into operations, insights about the competition, ideas for customer engagement, and strategies for growth. And the better the data and timely data management, the more distinct value it delivers to an enterprise.
Unfortunately, reaping the rewards is an ongoing challenge. Issues related to storage and security can compromise a data strategy, and without sophisticated analytics tools, data is mostly just confusing. In order to resolve these issues, companies are increasingly looking to the cloud.
With the right cloud and provider, it’s possible to minimize data issues and maximize the insights it produces. The question, then, is which one is the right one?
The Risks of the Wrong Cloud
Financial service companies are considered high-value targets because of the nature of the information they possess. Today, there are as many ways to exploit and acquire the information as the company has employees and network endpoints. Therefore, cloud security is a primary consideration.
There are three types of clouds: public, private, and hybrid. Each has strengths and weaknesses in terms of security and reliability, and the right choice will be different for each financial service company. It all depends on the type of data you manage, the web applications your users depend on, and the sorts of regulations you’re subject to.
Financial service companies increasingly face mandates for security and privacy. Non-compliance leads to significant fines and brand damage, but the issue is more complicated than just committing to ironclad security across an enterprise.
Sensitive data is required to be locked down, but more routine information is not subject to the same protections. Treating all data the same is an inefficient and ultimately ineffective approach, but trying to separate, segment, and sequester data based on its sensitivity is a herculean challenge. The search for the right cloud service must consider both security and flexibility.
As you make your decision, don’t rush it — a failed IT initiative is expensive and disruptive, especially when an asset as valuable as data is involved. Before making any final decisions, explore the pros and cons of each option carefully:
The primary benefit of the public cloud is that it’s managed by providers deeply invested in keeping users happy. As a result, this type of cloud is excellent in terms of scalability, the available pool of technical talent, and reliability. And if one data center were to fail, the network could simply redistribute the incoming load to continue business as usual, making the backup and recovery processes far easier.
The downside to the public cloud, though, is that because public clouds rely on shared resources, they are vulnerable to performance issues when demand spikes. They may also require users to lock into restrictive contracts with unexpected fees when usage scales upward. Finally — and most importantly — public clouds can make security more of an issue because users have less control over where and how data is stored.
In terms of ROI, the public cloud is a good choice for those who are budget-conscious because most services are pay-as-you-go. At the same time, though, because most providers charge at a transactional level, if your data isn’t properly tracked and managed, it can lead to high data costs. If you choose this option, be sure to plan ahead to stay on top of costs and avoid major expenses.
A private cloud offers many of the same advantages as a public one, but it also gives users more flexibility and control. One company occupies the entire cloud, allowing them to meet the mandates of multiple regulations like HIPAA, SOC, and PCI while making auditing easy. Private clouds also offer exclusive access to servers and applications that can be used to customize the customer experience.
In exchange for greater security and control, private cloud networks are also more difficult to scale, and users will have to sacrifice some mobility and accessibility. The biggest drawback, however, is that private clouds require more time, effort, and investment to manage without providing the fast, reliable backup and recovery that many financial services companies are looking for.
While the upfront costs are typically higher with the private cloud, ongoing costs may be less expensive over the course of five years. However, there can also be higher infrastructure and equipment costs to support remote access to data via a VPN. So while the private cloud is more flexible than the public cloud, the entry costs may make it a non-starter for companies on a tight budget.
The benefits of both private and public clouds are attainable with a hybrid approach. Users have infrastructure on-site, but they rely on applications hosted in the cloud. That allows users to migrate at their own pace or give new life to older systems, and the performance, security, and availability of hybrid clouds tend to be superior.
The drawback is that the hybrid cloud is the most complex of all the options. Unless it is carefully implemented and managed, it can create confusion for staff and headaches for IT pros. It’s also more difficult to support every application, especially considering advancements in virtualization, orchestration, and containers running applications.
Because the hybrid cloud allows a company to extend the life of older applications, this could lead to additional revenue and increased ROI. But it also complicates your staffing and tooling needs over time, and it may become expensive to support and maintain those applications. So if you’re willing to work through the complications for superior security, a hybrid approach may be a good fit for your company.
Cost is important, but so is reliability, security, accessibility, and flexibility. The right choice is one that makes sense starting at the bottom line and moving upward into the cloud.
Brian Elkins is the chief technology officer at Paradigm Tax Group. Elkins leads the company’s engineering team in the continual development of Ascend, Paradigm’s proprietary portfolio management database system. Driven by an intense passion for technology and innovation, Brian is an entrepreneurial, hands-on technology leaderwith 22 years of engineering and business management experience. He has built, grown, and led more than 150 staff in cross-functional hardware, software, program and project management, and global customer support teams in the U.S., the U.K., Russia, Ukraine, Korea, China, Hong Kong, and India, delivering over $400 million in new products and services to market.