Many manufacturers and distributors have already jumped aboard the cloud computing bandwagon, but is it right for your business? Some have not yet moved to the cloud, possibly because their staff resources and IT expertise are limited. Others have transitioned to the cloud, but they are dissatisfied with the cost, service offerings and security features of their current provider.

Evaluating the benefits

Cloud computing uses a network of remote third-party servers made available online. Rather than relying on your own computers or server, you remotely share software and storage to process, manage and share information. Potential benefits include:

• Lower Costs
  Cloud customers typically pay a monthly subscription fee or are billed based on actual usage. Reputable cloud service providers update their offerings and provide security patches on an ongoing basis. We recommend thoroughly analyzing the numbers for multiple years since providers may give you a discount on the first year’s usage and significantly increase the cost in subsequent years. The challenge in the analysis is assessing future hardware savings and putting a number on the risk that you assume when you host the software on your own system internally.
• Scalability
  You can scale up (or down) as your storage or data capacity needs change. For instance, you might use more cloud storage during seasonal peaks. Also, adding additional locations as your business expands becomes easier since the system is all cloud based.
• Convenience
  Cloud services are not limited to a physical location. Rather, the cloud can be accessed from anywhere, anytime on any device. This helps employees collaborate on projects and access reports and ledgers in real time. Remote access and the ability to work remotely is becoming a key factor in retaining talented staff. The cloud also allows manufacturers to share data with supply chain partners to facilitate just-in-time production and streamline workflow, as well as providing access to financial data for auditors, tax advisors and lenders. If you invite outside users to view data, the cloud allows you to control the level of access.

Vetting cloud service providers

Uncertainty about data security has caused some manufacturers to put off moving to the cloud. So, when shopping for a cloud service, ask about basic security features, such as firewalls, authorization restrictions and data encryption. You will also want to know:

• How frequently the cloud is updated;
• Whether data is backed up in multiple locations around the country;
• Whether the service has experienced any previous data breaches;
• How quickly the provider has responded to past security threats; and
• Whether you can retrieve all of your data in a nonproprietary format should the service go out of business.

Reputable cloud services offer continuous data backup and disaster recovery capabilities, so you do not have to worry about losing important records due to a physical server failure or a lost or broken hard drive. However, be aware that you might ultimately be responsible for any data breach, even if the information was stored by a third-party cloud service provider. So, consider negotiating restitution clauses into your contracts for cloud applications. Also, be realistic about how secure your internal system is today. Have you updated all your security features to keep current with threats as they are created, and do you have the proper IT staff in place to manage these risks?

Ask for referrals

When researching vendors, ask for recommendations from other business owners and professional advisors, such as your CPA. Once you have selected a cloud provider, periodically review your decision and consider alternatives. It may also makes sense to find or create a local user group with other companies using the same system. Sharing ideas among actual users can be very beneficial, and the group may carry more weight with the provider when enhancements are needed.

For more information, contact Mark Thomson or your ORBA advisor at 312.670.7444. Visit ORBA.com to learn more about our Manufacturing & Distribution Group.