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Budgeting Essentials Blog

Helping you master the practical essentials of Budgeting, Cash Flow, Accounting and Debt Relief.
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Some “clouds” are Safe - Is Yours?

 Many software companies are moving their software to the “cloud”.  They use convenience as a big part of their sales pitch.  But is what you give up in security worth the “convenience” of having your financial information in the cloud?  Learn more in this week’s blog.

When software companies talk about hosting your data in the cloud, it could mean a couple different things.  It could mean one of the safe “cloud” solutions like the big public cloud providers.  These are services like Amazon Web Services, Microsoft Azure, IBM cloud and Google Cloud Platform.  The primary purpose of these services is to provide secure computing services and they specialize in keeping their environments secure.  They hire people specifically to make their services as secure as they can.  Usually, this is not what the software companies are referring to.

Most often, when a software company is selling you a “cloud” service, they are talking about keeping and running your data on their own private network servers.  The primary people that they employ are there to develop their program.  Security is dependent upon the policies that they use to manage their network and security.  We have seen in recent years instances where the companies haven’t done so well.  There was a large retailer that had  up to 40 million of its customer’s credit card numbers stolen from their servers.  A large social media company inappropriately allowed a research company to access the data on as many as 87 million of its customers.

There are also other issues associated with using an online provider.  When you use their service, you in effect become “married” to that provider.  They have all your data on their servers.  In what seems like just a short time, you can have years worth of data on their servers.  If they go out of business or you decide that they don’t meet your needs any more, they have no incentive to be helpful in the data moving process.  This can waste a lot of your time and cause you great inconvenience. 

When you are setting up a new software program, you have enough to deal with getting everything just right and learning the new program.  You don’t need the added issues of trying to get your data efficiently moved out of your old provider, too.

I was listening to a presentation by a representative one of one of the large accounting and tax software providers.  When it came time for the Q & A portion of the program, the moderator indicated that there were a lot of questions coming in about security.  The presenter indicated that they had hundreds of thousands of Social Security numbers on their servers that hackers would love to get their hands on and that they had not been hacked.  But he had to add a qualifier.  They had not been hacked yet.

The majority of security issues are related to people.  Poor password management and security precautions (like antivirus and anti spam software) create most security issues.  These issues are a problem whether you keep your data on a local machine or in the cloud.

There are some advantages to using a cloud service.  You provider can use redundancy, by having data centers in different parts of the country so a local natural disaster can’t shut you down.  That redundancy also keeps your data safe from a hard drive failure, which is a common issue for people who use local computers.  You get the advantage of using the power of multiple computers, which distributes your computing to available hardware resources.  Having your data on the cloud also makes it easier to work together with team members who are in different parts of the country.  Most of these benefits will help large companies more than small businesses.

As an accountant, I have been trained (correctly), to be risk adverse.  This is especially true when it comes to keeping the company financial data safe.  It is estimated that less than 10% of data in the world is currently being stored on the cloud.  For me, the advantages of using a cloud provider don’t yet outweigh the risk associated with keeping your data in the cloud.  While I can’t predict the future, I can see that some day it is likely that using cloud storage will be safer and more common than it is today.

It is just not time yet.

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© 2019 Dan Heiland 2019 Kat Heil, LLC

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