For small businesses, cloud computing might seem like the holy grail. No hardware to buy. Simply sign up with a provider, wire in a few devices, and go to work. No muss. Little fuss. Few IT costs. Easy-peasy.

As legendary ESPN college football pundit Lee Corso says when picking his weekly winners: “Not so fast, my friend!”

While businesses of all sizes have jumped into the deep end of cloud computing solutions with both feet – International Data Corporation expects public cloud spending to hit nearly $500 billion by 2023 – the risks involved in storing and accessing valuable information there have grown just as rapidly as its popularity. Gartner Research says cloud computing comes with a unique set of risks.

“Despite the advantages, cloud computing comes with an added vulnerability if data is stored incorrectly or if the provider’s own security is compromised,” says Gartner’s Matthew Shinkman.

What’s in the Clouds?

As almost any weather forecaster will tell you, predicting what is in clouds and what they’ll do isn’t easy. Currently, the three most prominent forms of cloud computing are Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS).

• SaaS is specialty software provided by third-party companies that, in the retail industry, allow businesses to manage everything from ordering and inventory to final sales and deliveries. All services are accessed through an internet connection.
• IaaS is a model in which providers offer IT infrastructure like servers, data storage and networking over the internet. Microsoft Azure and Amazon Web Services are examples of this kind of service.
• PaaS, according to InfoWorld, is cloud computing that offers a platform to subscribers that allows them to develop, run and manage business applications without having to build and maintain the infrastructure the applications normally require.

All these services provide retail businesses convenient access to computing processes normally reserved for businesses with their own IT departments and enough capital to develop and run them. Most of the online giants and big-box stores develop and maintain their own proprietary retail management systems. The cloud computing processes available to independent retailers by SaaS providers typically involved retail business management.

• Ordering and inventory management
• Point of sale
• Back office and accounting

All three of these services allow independent stores to operate on the same playing field of business automation as the big boxes and larger chains without the IT investment. They’re also typical of big business, today.

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening,” says Tom Goodwin, senior vice president of strategy and innovation at Havas Media.

Storm Clouds

While cloud computing services are a boon to small business management, they aren’t a silver bullet that can magically help independent stores slay larger competitors. Like any electronic solution, they have limitations and drawbacks.

Connections

All the solutions are dependent on reliable and secure internet connections. Those qualifications alone put store performance in the hands of an internet service provider which isn’t always comforting.

The U.S. Census Bureau says that 90% of homes have a high-speed internet connection, but a recent survey by the American Customer Satisfaction Index (ACSI), internet service providers (ISP) have customer satisfaction levels ranging from 62 to 77 out of 100, which any student will tell you isn’t exactly sparkling.

ACSI also reports that while the services are improving, “service is largely considered to be slow and unreliable, and competition is limited in many areas.” The added stress the pandemic has added to those services, with so many people now working from home, increases the possibilities of sketchy service.

Onsite solutions can’t solve unreliable internet connections, but they can provide internet failover switches that automatically keep your business operating when an internet service quits.

Security

According to Gartner’s Security Risks in Cloud Computing report, close to 90% of companies believe “a lack of governance and compliance visibility” are key risks in trusting your data to cloud service providers (CSP). It also says as much as 80% of companies are concerned about data security risks when using cloud computing services.

Some of that risk can be lessened by businesses opting for private cloud services over the public cloud. Private cloud computing dedicates resources directly to a single business, while public cloud users shared servers and resources. As with all services, having your own, private cloud computing and storage, increases costs.

Public clouds put data at risk and not just from cybercriminals. Gartner’s report says storing data in a public cloud makes it susceptible to malicious co-tenants if the cloud service provider’s data separation methods are less than state of the art.

Access

One of the beauties of cloud computing – maybe the biggest advantage – is with all the services, businesses have little investment. However, that is also one of the biggest drawbacks. Without having onsite hardware, stores are dependent on their providers to safely store all their data and make it accessible.

“Essentially, the fundamental difference between cloud versus on-premises software is where your data resides,” explains Charles Owen, chief experience officer for Paladin Data Corporation. “On-premises software is installed locally, on your business’ computers, where cloud software is hosted on the vendor’s server and accessed via a web browser or a resident applet.  On-premises software puts the user in control of their data allowing them full access to the data and added protection from internet failures.”

Unlike purely cloud computing SaaS providers, Paladin provides a hybrid system that combines the best of both worlds. It features onsite hardware with Paladin software to ensure reliable computing and secure storage while offering cloud data backups, network security management, and remote access.

Owen says Paladin’s software and services are combined into a single month-to-month SaaS subscription license, similar to cloud-based subscription models but without the typical long-term contracts. Paladin can also work with a store’s existing computer equipment if it meets minimum system requirements.

Like most cloud-based systems, Paladin does not require servers to run the application. Paladin has designed an innovative and clean distributed processing topology that doesn’t require stores to have expensive servers. The database can reside on any back-office or point-of-sale terminal and run in the background. In the Paladin enterprise environment, the data is replicated in near real-time to a publisher service that Paladin maintains on its own server.

Compliance

Ever hear of GDPR? The General Data Protection Regulation is a European Union law that protects personal data and privacy in the EU and European Economic Area. The California Consumer Protection Act (CCPA) is a similar law that affects all companies doing business with California residents no matter where the store is located. Both laws require businesses to inform customers about how they store, process and use their information.

Pharmacies have various layers of governmental regulations and insurance compliance that stores need to access. They also have another layer of customer information protection most retail stores don’t. Keeping that information onsite is advantageous.

Firearms sales is another business that requires governmental reporting and compliance. Keeping those records onsite protects stores from a myriad of potential problems.

Stores that use cloud computing put their faith in their Cloud Service Providers to properly process and store customer information.

The bottom line is it comes down to personal preference. Cloud services offer retailers a cost-effective way to get started in business. But if you value security and control of your business data, a hybrid system where you keep your data onsite and still have network support from the cloud could be a better solution.