By Kyle Berry | Principal
Stop for a moment and think about your business.
What kind of company do you work for? Is it an IT company?
More than likely, it’s a manufacturing company, an energy company, a retail company, a health care company, or any other industry in between. While IT is critical to our business’ success, most of us would agree that our companies are not IT companies.
However, the complexities of IT cause us to spend millions on servers, storage, network equipment, data centers, software licenses, administrators, engineers, developers, and the list goes on. Factor in the need for reliability, redundancy, integration, and connectivity – and you start to feel like you were in the outhouse when the lightning struck. Is it possible to enable business operations while simplifying IT? Moving to the Cloud seems to be touted as a means to simplify, but it can be difficult to embrace what is unfamiliar.
The Cloud can mean different things to different people. Whatever the situation, that definition often falls into one or more of three categories: Infrastructure as a Service, Platform as a Service, or Software as a Service. There are numerous articles on the pros and cons of each, but for the sake of blog brevity, let’s focus on Software as a Service (SaaS).
Does it really make sense to migrate key business functions such as email or your telephony environment to the Cloud? How about critical business applications? What’s keeping folks from migrating their business functions to the Cloud? The three concerns that I hear most often focus on data security, high subscription costs, and the inability to customize applications.
Most likely, the first concern that pops into peoples’ minds about using SaaS solutions is the idea of their data residing in a third party’s environment. This concern is certainly fair. Part of the evaluation and selection process of the tool must be to understand how the provider keeps the data secure and to ensure that you are comfortable with the answers. How do they segment your data from the data of their other customers? Is the data encrypted? Are different encryption keys used for each customer?
While many are rightfully concerned about data security, these same well-intentioned people are at companies that lack the processes to regularly apply security patches to their on-premise environments. A recent report from the Ponemon Institute and ServiceNow states that 48% of companies have experienced a data breach in the last two years, and of those companies, 54% were due to vulnerabilities for which patches were available though not applied. SaaS providers are on the hook to patch their environments – not you. Any SaaS provider worth its salt should be able to articulate its patching processes.
Hardware and Software Costs
Let’s face it—initially software subscription fees can sound reasonable until you realize that you have 2,000 people who need Office 365 licenses, or 350 agent extensions for that Cloud telephony solution, or a 100-person sales team that needs Salesforce licenses. They add up quickly. After all, you already have the sunk cost of on-premise hardware… but recurring software and hardware maintenance costs must be considered.
Think about this – what happens to the cost model when you have to update your on-premise hardware? Not having disaster recovery (DR) is like playing Russian roulette, so factor in a redundant environment for DR, including data replication. Also, facility costs that have redundant cooling, redundant power, physical security, etc. must be anticipated. It doesn’t take long for the price differential to change, and I haven’t even touched on the manpower required to support on-premise environments.
Another concern centers on the common inability to customize SaaS applications. Companies often customize application pages, fields, and database elements to fit their business processes. This practice is not necessarily a bad one, depending on the uniqueness of the business. However, when you later see a multi-million-dollar price tag associated with applying vendor updates to heavily customized applications, it’s worth reflecting on those customizations to determine if they really differentiate your business or not.
While your business does not have the flexibility to code customizations, most SaaS applications do allow for configuration to meet business needs without interfering with the core SaaS product. This configuration may include the ability to define business rules, add new fields and values, and create new pages and elements within the framework of the application. Some applications have their own bolt-on app stores, such as Salesforce.com’s AppExchange. The versatility of many applications may effectively satisfy the needs of the business while saving money over the long term.
Migrating to the Cloud is not the perfect answer for every business, but it is the right solution in many situations. Look at the big picture, ask the challenging questions, and perhaps your concerns will be alleviated.