Cloud Computing Considerations


By Patrick Armknecht

If you ask five different people to explain cloud computing, more than likely you will receive five different answers. In a nutshell, cloud computing can be described as a subscription based or rented services that are accessed via the internet. These services include business applications, file storage, disaster recovery and network capacity among many others. I’ve outlined some of the benefits and risks that should be taken into consideration when deciding whether cloud based computing is the right choice for you.

Benefits that can be realized from cloud computing include;

  • Reductions in hardware costs – Cloud providers maintain the infrastructure needed to deliver their service, thus reducing the amount of capital expended for servers and server related software.
  • Reductions in annual maintenance costs/fees – Since cloud computing is a service there are no annual maintenance fees; only the applicable service fee.
  • Better cash flow - Cloud services don’t require the large upfront cash outlay that is typically required when purchasing business applications.
  • Increased scalability - Cloud providers have the resources and ability to add servers or load shift as necessary.
  • Mobility/Remote Access – Cloud applications can be accessed by end users from anywhere that they can access the internet.
  • Redundancy/Disaster Recovery
  • Faster deployment – Businesses can typically be up and running with cloud based services more quickly than they can with client server applications as there is no infrastructure to maintain.
  • Updates/upgrades – Upgrades and /or updates to the servers and applications are usually the responsibility of the cloud provider. This allows your IT resources to focus their time and effort on internal or non-cloud based applications.

Additionally, these upgrades are often transparent to the end users.

  • Flexibility – Cloud services allow for fluctuations in users or functionality on a periodic basis (often monthly). For example, a business with seasonal demand could add users during their busy season and reduce them afterwards.

Risks associated with cloud computing include;

  • Reliability of the cloud provider – If your cloud service provider were to go out of business, what would be the impact on your operations?
  • Data security and confidentiality – How do you ensure that controls are in place to prevent employees or customers of the cloud provider from accessing your information?
  • Internet connection – If your users don’t have access to the internet; or frequently experience internet connectivity problems, cloud computing will be problematic.
  • Location of servers – There are different regulations regarding the access to data that are dependent upon the country where the cloud providers servers reside. For example, under the Patriot Act, the United States has the right to access information about citizens of other countries.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.