Cloud based software is marketed as a turn-key solution that requires little upfront investment, an easy on-ramp to acquiring new software.  This can be highly attractive to small- and medium-sized business, but businesses should take care to understand the risks and challenges involved in moving to cloud based software before making the move.
The risks and challenges of cloud based software will vary by vendor and solution and investing a little bit of time upfront in due diligence can help you make an informed decision about moving to the cloud.  This article provides a framework of questions to help you create a thoughtful approach in evaluating a cloud based software solution.

What is cloud software?

Cloud based software, also referred to Software as a Service (SaaS), usually includes:
  • vendor managed hardware infrastructure, or the servers, storage, and network equipment needed to run the software
  • software licenses
  • IT staff to provide ongoing maintenance and support services
Cloud software costs are often in the form of monthly service fees which can offer cost savings in upfront hardware infrastructure costs and ongoing technology support.  In other words you don’t need to purchase hardware like servers and storage or hire an IT person in favor of paying for cloud software where these costs are included in the service fee.  This is type of solution can be very attractive for small to medium sized businesses with limited budgets.

Getting Started

There is effort involved in getting your data into any new software platform and whether you are moving data from existing software or inputting data from scratch, you should ask the following questions of your software vendor before making the move to cloud software.
  • Who will be responsible for moving my data into the software?
  • Do you offer any tools that would help me import my existing data into your application?
  • Do you provide services to help me move my data into your application?
  • Are there any fees or costs associated with moving data into your application?

Data Protection

Once you move your data into the cloud operation you no longer have control over where that data is stored or how it is being protected.  Your data is the core of your business, you should be asking the following questions before you feel comfortable turning your company’s data over to a cloud software provider.
  • Do you offer any guarantee that my data will not be lost?
  • Is my data stored on redundant hardware?
  • Is my data backed up, how often is my data backed up, and how long do you keep data backups (also called backup retention)?
  • If I delete something on accident are you able to restore it?  And is there any fee or cost to restore data accidentally deleted by a user?
  • Do you have offsite storage where my data will be kept to reduce the risk of data loss in the case of a major disaster?

Software Availability

If you rely on software for the critical functions of your business you will want the software to be accessible during working hours.  Hardware failures, unexpected outages, and routine maintenance will impact the availability of your cloud based software.  You should ask for details about a vendor’s service agreements and track record in meeting those agreements.
  • Do you offer any Service Level Agreement (SLA) or uptime guarantee?
  • What happens if you do not meet your SLA or uptime guarantee?
  • What are the common days of the week and times when you schedule regular maintenance?
  • Have you had any unexpected outages (major or minor) in service in the past three years?
  • What was the total amount of unexpected downtime last year?

Regulation and Compliance

Some industries have compliance and regulatory burdens businesses are obligated to meet and in some cases these regulations extend to service and software providers.  HIPPA, for example, would extend to your cloud software providers.  If these regulations apply to your business you will want to ask the vendor questions about their ability to meet regulations and make sure their compliance with these regulations is documented in their written policy.
  • What data standards and regulations does your software comply with?
  • Can you provide a written policy that shows how you meet these regulations?

Moving Out

Over time as software offerings evolve, business needs change, and budgets flex you may need to move your data out of the cloud software.  The time to figure out how you move your data away from the cloud software provider is before you move your data into the solution.
  • What data can I export out of your software?
  • What formats can I export data to Excel, CSV, etc.?
  • If some or all of my data is stored in a database can I get a full backup of that database?
  • If some of all of my data is stored as files, can I get direct access to those files (through FTP)?

Long Term Cost

Another important item to review is the long term costs of a cloud based software solution versus competing on premise solutions.  Some questions you may want to answer internally to determine if there the cloud software solution actually offers a cost savings over traditional on premise software.
  • What is the total cost of the solution over three years and how does that compare to the total costs of an on premise solution?
  • What is the breakeven point when the total cost of an on premise solution is the same as the total running costs of the cloud solution?