It seems like every company is coming out with cloud-based solutions. And so it also seems like the right time to take a look at the good, the bad and the ugly of migrating to a cloud-based solution.
We’ll start with the good:
- Technology: Removes the technology headache; allows staff to focus on other important tasks; no longer worry about functionality and software upgrades as they are taken care of for you.
- Money: Saves it. Money, that is. A cloud provider can offer their services at a lower cost because it has a large enough operation to afford skilled people and state-of-the art technology than a small or medium sized business can offer itself.
- Access: It’s easily accessible from anywhere with an internet connection.
- Immediate: The application is already up and running and the provider makes sure it keeps running. So once migrated, it’s instantly available for use.
And the bad:
- Security: This is the most obvious threat and it largely depends on the service and delivery models of the providers. For investment management firms, best practice is to select a provider who ensures that each client has a separate, private environment and maintains the most up-to-date server security.
Lastly, the ugly:
- Commingling Data: Not only does commingling data violate the fiduciary responsibility that investment managers have with their clients, but it can also pose added security and data problems.
- Privacy: This goes hand-in-hand with the points about security and commingling data. Ensuring confidentiality, data integrity and availability is a direct product of security and commingling data.
Of course there are more goods than bads in cloud solutions.
As far as the uglies go, if a cloud solution is based on any of the uglies above, skip it.
It goes without saying (but we’ll say it anyway) for anyone considering upgrading to a cloud-based solution, don’t upgrade without doing the proper due diligence. Make sure the requirements are understood, the risks assessed, the questions asked and the appropriate controls in place.
