(This article originally appeared in Forbes)
I regularly run into clients looking at customer relationship management systems who say they have concerns about the cloud. Their biggest concern is always about their data.
“How secure is my data?” one prospective sales manager recently asked me. “Where is it stored? How do I know it’s not going to be compromised or stolen?” All good questions. And, believe it or not, the answers aren’t very difficult.
Most of the mainstream software providers have servers in data centers that are locked down at levels comparable to the military. Many host their systems with the big cloud platforms offered by Amazon, Microsoft and Google. These companies have endless resources and can afford the very best in security software, tools and personnel to make sure that their customers’ data is as secure is possible. Nothing is 100% guaranteed, of course. But the fact is that a company’s data is likely much more secure hosted by these providers instead of being under the in-house supervision of a local IT firm.
So, security is not really the issue in the cloud folks. There’s a much, much bigger issue: cost control.
Software providers love the cloud because it allows them to provide quicker support and it’s easier to disseminate upgrades and fixes. But that’s not the main reason. Software makers love the cloud for the monthly fees they charge. Fees that turn into a revenue stream that substantially increases the market value of their firms. But these fees create a problem for their customers that are much more significant than the security of their data.
“As cloud adoption rises, so does cloud ‘sticker shock,’” writes Joe McKendrick on ZDNet. “That tremendous savings seen from the switch to up-front CapEx investments in information technology to subscription mode soon gets soured as the rising monthly bills come in for services nobody knows where and when they are being used.”
McKendrick is referring to a recent survey of more than 800 “FinOps” (finance people that monitor, measure and mitigate the costs and value delivered from cloud) which found that almost half of respondents had little or no automation of managing cloud spend. “The dirty little secret of cloud spend is that the bill never really goes down,” J.R. Storment an executive director of the FinOps Foundation, who conducted the survey, said.
The fact is that once you have a cloud based system—be it CRM or otherwise—you’re in the iron group of the provider. So what starts out as an affordable monthly fee can be indiscriminately and quietly increased over time. So far, according to some, these price increases haven’t been as much as people think—but they’re still running at twice the rate of inflation. And just wait. Now that the pandemic recession is behind us, the economy grows and inflationary pressures build I’m already bracing our clients for an inevitable announcement of price hikes from their cloud providers.
This just happened to many of my clients using Zoho who recently heard the bad news that their monthly fees of the popular CRM product (my firm is a Zoho partner) have been hiked by about 15%. More price increases have quietly happened—sometimes even annually—over the past few years at cloud providers like Microsoft, Google and Salesforce. Hey, even Netflix raised their fees by as much as 12% last year. How dare they?
And what are we to do at this point? Find something cheaper? Go through the pain, suffering and employee training nightmares of migrating our data off of one system to a new one? Miss out on the next season of Ozark? God forbid!
The cloud certainly has its benefits and there’s no going back to the way things were done before. But if you’re evaluating a cloud based application don’t get too caught up in security. The people providing these systems are on top of that. They better be. Their entire business models depend on it.
Instead, what you should be focusing on is the subscription cost and if your provider can commit to a long term contract without increases. Because I’m pretty sure that behind closed doors, the executives leading these cloud providers are huddling with their accountants, lawyers and investment bankers to strategize when next they can—shhhh!—increase their monthly fees and for how much. Of course there’s a limit. But the bar is pretty high. So while they have the chance they’ll take. Regularly. And you’ll be paying more.