The Costly Truth about Cloud Divorce

When it comes to storing data in “The Cloud,” most business executives sign with a provider, never thinking about divorce. But what happens when you want to leave or move to another provider? What are the risks associated with that split, and how costly can it be?

While cloud divorce may seem fairly new, it’s been happening for several years — sometimes because a provider goes belly up. In 2013, cloud storage provider Nirvanix went out of business, leaving customers scrambling to transfer their data. Not surprisingly, some companies didn’t get their data out in time. Even an established international company like Intel can be the source of a data migration headache. About a year ago, Intel decided to discontinue its suite of email security products, which created a big challenge for customers who needed to figure out what to do next as well as the best way to transfer data.

To understand the ramifications of cloud divorce, it’s important to understand “The Cloud,” especially since almost 68 percent of organizations use some form of cloud, representing a 61-percent increase from last year, according to an IDC InfoBrief, sponsored by Cisco in August 2016. The report also revealed that organizations expect to increase on-premises private cloud spending by 40 percent over the next two years. Simply put, the cloud is a service that hosts a business’s data in an offsite location, or data center. It’s multi-tenant, meaning the business is on the same equipment as other companies, and it’s not under that business’s direct physical control.

There’s no doubt that the cloud has its benefits for some businesses. A 2014 survey of IT execs revealed that 80 percent of cloud adopters saw improvements within six months of moving to the cloud. That same year, business here and abroad spent an estimated $13 billion on cloud services.

While cloud computing often increases efficiency, too many businesses make the mistake of placing all of their trust in the cloud. Think of a company that uses a cloud-based CRM system to store all of its customer data, including invoices, customer databases, sales records, service records and more. That’s where the opportunity for trouble lies. The more information placed in the cloud outside of a business’s direct and exclusive control, the higher its risk.

The tricky part comes when there’s a transition, such as when a company wants to transfer its data to another vendor. Some cloud-based companies will allow each client to access the database that holds all of its information directly. This gives the client company the most flexibility in terms of converting to another system. Another key consideration relates to the vendor’s export capabilities. If and when a company wants to change providers, it will want to get its data out on its own in some sort of electronic format that it can then import to a new vendor. But more often, especially when businesses don’t read their agreements carefully, the fees to transfer data can be very costly.

Our firm works with a lot of financial services companies that have a FINRA (Financial Industry Regulatory Authority) requirement to archive every email that is sent or received. We are dealing with some issues right now where entities are separating, or combining, and the email archives have to be separated or combined. The archive companies are charging thousands or sometimes tens of thousands of dollars to do this work. Because they hold the current archive, the customers are essentially held hostage — they have no choice but to pay the fees. There’s no option of getting two other quotes for someone to move data from one vendor to another — the source vendor has the data and won’t give anyone else access.

Ideally, business executives will research the ramifications of cloud divorce before signing with a provider. Taking time to vet the vendor before handing over valuable data could save precious time and thousands of dollars in the long run. And, for those already storing data in the cloud, read your agreement carefully to find out what your risks are. It’s better to be prepared for a ‘what if’ scenario than to be caught off-guard and thrust into a crisis mode.

Michael Cocanower is the founder and president of Phoenix-based itSynergy.