Data - On-hand or Off-site?

What is Your Risk Tolerance?

In all likelihood, you're not going to experience some tragic incident that wipes out your business; you won't have an earthquake that disrupts your utilities; your building isn't going to burn down; the local dam isn't going to burst and wash away your office building in the valley.  These events are so rare that it is probably more likely that Superman would show up in the nick of time to save you anyway.However…Things do happen, like the mind-numbing horror of a ransomware attack on your business.  That is an event where some malicious criminal gains access to your server, encrypts all your data, and demands some amount of money in order to decrypt it.  It’s real. I know two small business owners personally who’ve been through this nightmare.The hacker demands that money must be delivered within a fixed time period or they threaten to erase your entire system permanently and irrecoverably.  That is the end of your business.  All your software is gone; all your accounts receivable and payable are gone; all your other proprietary data is gone.  Scary, right?Unless you are specifically targeted, these cybercriminals seldom know who their victims are.  The amount could be trivial because they expect that it is a home user with a personal computer.Companies often just pay these demands (usually in untraceable bitcoin, an electronic currency); they generally do not report these attacks because it would destroy their credibility in the market.  Estimates place losses in the billions each year.The good news is that we're getting much better at decrypting these compromised servers, and often they can be recovered without paying the ransom.  For the rest, having a good reliable backup is probably the best strategy.  Either way, it takes time. And time is money … which means you’re losing money because your business is stalled. On the whole we really want to try to avoid paying these creeps so the rewards are simply not worth the effort.

On-hand Data

With a great security system and well trained employees, it is terrific to have all your material within your business space, under your direct control.  You have your own trusted IT-staff that can make precise modifications exactly according to your needs.  No matter how usual, complex, or thoroughly customized your system is, it works the way you want it to.To prevent disaster you may have a backup server site, complete with all the staff and overhead costs that implies.  In the event of a disaster, this completely separate server retains all your business records.  It can instantly come online if your private server goes down for any reason.Since this server constantly backs up your primary server, if your main server were infected with ransomware, would it also propagate in your backup server?  It could.

Can The Cloud Protect Me?

Sometimes…though The Cloud has no special software or invulnerability.  What they do have is redundancy.  If a copy on a particular server gets corrupted, often it can just be deleted and replaced with an identical copy from a different server.  In order to maintain speedy service, your server may be maintained in several locations so the people in Japan or Italy don't have to rely on a connection with North America and the consequent lag time that would create.

Aside from Security Issues

By now everybody has heard of SaaS (Software as a Service) such as Office 360 from Microsoft™ where you don't have an office suite on your computer but always connect to the most up-to-date version via the Internet.  Everybody in your organization uses the same program, achieves the same results, and eliminates incompatibilities.The cousins of SaaS are Infrastructure and Platform (IaaS and PaaS) which essentially means that you do not have to own any servers.  You can run your entire business on virtual servers, and because there are hundreds or thousands of other clients, the costs are defrayed amongst many.Would you rather have your very own $10,000 server (or more), or pay a monthly access fee that will give you as much space as you need, expanding and contracting as necessary so you don't pay for what you're not using, and you don't run out of space.  You don't have to buy new equipment; replace outdated units; and you don't have to do any maintenance at all. Remember, the cost of the on premise server is a fraction of what it takes to hire someone with the skills to maintain it.Yes, it can be costly to get set up on The Cloud, especially in the co-located versions where you supply the servers and software and then they maintain it for you.  Using their facilities eliminates the need for you to have a massive IT staff (especially if you're a young start-up) which can save you a great deal.  Using their equipment means you need far less capital for start-up. And perhaps even better, the new platforms as a service offerings from companies like Microsoft (Azure) and Amazon (AWS) offer ease and scalability without you having to supply servers and software.

What should I choose?

If you're just starting out, do everything on The Cloud to keep your working capital free for development of your product or service.  If by chance your company doesn't take off, you won't be stuck with thousands and thousands of dollars' worth of equipment that nobody will buy secondhand for more than pennies-on-the-dollar.If you already have a local private server, instead of investing money to expand your existing system when the need inevitably arises, try expanding on The Cloud.  Consolidate your private servers into smaller and smaller units as portions begin to fail (it's a constant process) until you're down to a vital core.  Attrition has done the job for you.

The Takeaway

Some places, like hospitals, need to maintain private servers so that in the event of a local disaster they have all their patient records and medical histories.  Even without an Internet connection to the rest of the world their internal system can remain operational so they know how much of a certain drug was given to a particular patient.  They're also good candidates for co-location with offsite file backup.So the ultimate choice is up to you and depends very much on your individual circumstances.  The Cloud most definitely saves you money; private servers give you the ultimate control and customization for your needs.  Which will best serve your business model?The future is approaching fast.  It's going to force us to decide sooner rather than later.  Give this some serious thought now so you're prepared to make a decision.