Cloud-based services are rising in popularity, giving Investment Advisors the opportunity to store a wealth of information (pun intended) across an expanding network and giving access to data and information whenever and wherever they choose. Such a network is invaluable when your need to access it from various locations, have a disparately located workforce, or work at non-standard business hours are key to your success.
While there certainly is a capital expenditure savings when it comes to implementing a cloud solution, the flexibility and convenience comes at a cost. And not all of those expenses will be made obvious when you choose your cloud provider. Here are a few of the hidden costs you could encounter…
1. Over and under-provisioning
Cloud infrastructures are increasingly popular owing to the fact that you only pay for the storage that you use. You would think it’s simple to control the amount of data you handle on a daily basis. However, it is incredibly easy to over-indulge, or under-fill a virtual server, meaning that you either end up paying for additional storage that you didn’t bargain for or forking out for space that you’re just not using.
While it’s possible to scale resources back, and to locate areas where the server isn’t running to its potential capacity, such tasks take time and money. And usually this happens AFTER a big invoice hits. It’s essential that you scale your servers correctly to begin with or risk overspending.
As an investment advisor you’ll no doubt be aware of data security issues and the need to remain compliant. However, did you know that many documents and files now require security and encryption certificates if you’d like to store them in a cloud based system? Such certificates are designed to ensure that you’re taking the necessary steps to protect data. But security comes at a cost. It’s essential you do all that you can to protect the interests of your business and its clients, but at what price?
3. Making the wrong storage choice
As a rule cloud service providers offer three different tiers of storage options, ranging from the most efficient and expensive, to those that work out cheaper but store far less. Before choosing an option that works for your Los Angeles based investment counsel firm it’s essential to determine how much data you’re likely to want access to. Hidden costs are accrued by those paying for the top tier of service that they then never use or opting for the most cost effective tier and having to upgrade each time they must access information. Before you sign any long term contract, you have to ask the questions - how much are you likely to need to store and how often will you access it?
4. Introductory offers
Be wary of cloud services that are offered at a discount. Cloud service providers often bank upon businesses snapping up the initial discounts, freebies, or limited services and then only to find that they’re overusing these services or letting the free trial lapse.
What restrictions or thresholds are in place over your cloud access? Do you know exactly what you’re being billed for and what’s been offered as a complimentary extra? Read terms and conditions carefully before signing anything. Ensure you know what restrictions apply and whether there’s a time limit.
5. Rushing a decision
One of the worst things you can do is shopping for a cloud provider while you have deadlines looming or an urgent need for additional storage. Barreling into a decision as important as this could lead you to sign up for a service that’s neither convenient nor cost effective or end up selecting a cloud service that’s only good for the short term.
While most cloud servers will have limited free storage for your files and folders, many charge you when you come to extract data.
Keep in mind, this is a long-term relationship you’re looking to enter into. While cloud computing may be touted as a commodity, don’t forget your technology is the backbone of your operations. And moving between Cloud providers is a whole ‘nother can of worms. So, plan wisely. Beyond the impact to your business, it’s expensive if you realize you’ve made a mistake and need to move after the fact.
Cloud computing has a ton of benefits and could turn your firm into the efficient business you’ve always dreamed of. However, it’s essential you take the time to properly research the providers, what they actually offer, and what they’ll ultimately cost – including the hidden costs.
To follow-through on the concepts introduced here, be sure to download your free guide, Investing in High Net Worth Clients: The LA Investment Advisor's Guide to Using Technology to Manage and Grow Your Firm.