Guest Blogger

By Larry Augustin, Chief Executive Officer, SugarCRM

The cloud is having its day in the metaphorical sun, following social and mobile in topping IT priority lists for large enterprises. A recent Bitglass survey of CIOs and IT leaders revealed that 55 percent of respondents said their companies embrace a “cloud-first” strategy.

That’s hardly surprising – the cloud-based Software as a Service (SaaS) model offers a lot of advantages for Customer Relationship Management. They’re off-the-shelf, rapidly deployed and can be affordable. But there are pitfalls.

Most cloud solutions are available only in proprietary, multi-tenant, shared infrastructure, single cloud configurations. There’s little or no opportunity for companies to decide where they want their applications and data to reside. Public? Private? Within your own country’s borders? On-premise? A hybrid combination? Often, the only choice is the vendor’s proprietary cloud.

Security concerns, regulatory requirements and enterprise integration strategies should be carefully considered before you get locked into a lengthy contract.

Integration is a big issue. I’ve spoken with a number of CIOs recently who’ve said that one part of their business has bought a SaaS solution. A while later, they need to integrate that data with the rest of their business but they don’t have any flexibility – it’s effectively locked up in proprietary siloes. It’s going to be a huge issue. Companies that do customer experience well must have all of their data sources integrated – it’s that simple.

Increasingly, according to Gartner, sophisticated multinationals with high integration and security needs are turning away from the public cloud to private cloud and on-premise solutions.

A large financial company recently told me: “There is no way we are putting our customer data in a public cloud environment where we lose control.” Not only is there a fear within some organisations of losing control but some industries like financial services or healthcare must comply with strict data regulations. Due to this, an “out of the box” cloud CRM offering just won’t cut it.

Earlier this year the Bank of Queensland, Australia, was forced to write off a $10 million investment in a three-year trial of a CRM solution after the system did not meet the operational and regulatory requirements set by the Australian Prudential Regulation Authority.

Many countries have strict rules governing the collection and storage of customer data. Germany requires that data about German users must be stored within the country’s borders. Recent US court rulings suggest a similar localisation there.

There are data security concerns too. Imagine investing in the best security tools, the most sophisticated authentication protocols, and still being at the mercy of the cloud vendor’s security mechanisms? Not a comfortable feeling. Factor in high profile data breaches such as Anthem Insurance, AT&T, even Ashley Madison, and everyone starts to think about the risks: compromised reputation, lost business, fines.

Then there’s cost. An electronics multinational I worked with reviewed the public cloud CRM solutions available and found that moving large volumes of data across multiple public cloud vendors was just too costly. For global enterprises, the size and complexity of their customer data is challenging to manage in the public cloud.

Organisations should have the freedom to implement the systems and architectures that best address their needs for security, compliance and data integration. The cloud is great. But getting there shouldn’t force you to put your data, your customer relationships and your business at risk.

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