Millions of people use cloud computing and Software as a service (“SaaS”) every day, for tasks such as emailing and shopping online. However, businesses can greatly benefit from the use of SaaS as well, but they need to be aware of both the opportunities and the risks.

SaaS is a software licensing and delivery model in which software is licensed on a subscription basis, is centrally hosted by a third party provider and typically accessed by the user through a web browser. Instead of having to buy, install and maintain the computer infrastructure to support software that a company uses to run its operations, they can instead rely on a third party to provide support and maintenance.

There are a number of technical and business advantages over traditional form of hosting software internally that can have a direct impact on how businesses operate, including:

  • Broad access: Services are accessible from a wide variety of devices (such as PCs, smartphones and tablets) and from any location with network access to the cloud.
  • On-demand self-service: New services and capacity can be provisioned quickly and easily, often without vendor involvement.
  • Measured costs: the Company pays only for the cloud services and resources they actually use.

These technical advantages can translate into some significant advantages to the Company:

  • Rapid implementation: Less time is required to get up and running on cloud-based systems.
  • Cost predictability: Cloud’s pay-as-you-go model, which includes the cost of system upgrades, makes it easier to predict software costs.
  • Agility: Companies can quickly deploy new capabilities and business processes to stay ahead of the competition and keep pace with changes in the marketplace.
  • Scalability: Cloud provides a flexible platform that can grow or shrink as needed, enabling businesses to pursue new ideas and serve new customers.
  • Resources: Access to sophisticated software and powerful hardware that a business may not otherwise be able to afford.

Although SaaS and cloud computing can offer businesses these significant cost-saving benefits, the service does come with certain security risks. When evaluating potential providers of cloud-based services, a Company should keep these top security concerns in mind:

  • Secure data transfer: All of the traffic travelling between the Company’s network and whatever service being accessed in the cloud must traverse the Internet. Make sure data is always travelling on a secure channel.
  • Access controls: the Company should define the access they want user’s to have to the data, and determine if default access rights meet the needs of the Company, or if they need to be refined.
  • Secure stored data: the Company’s data should be securely encrypted when it’s on the provider’s servers and while it’s in use by the cloud service. Ask potential cloud providers how they secure your data not only when it’s in transit but also when it’s on their servers and accessed by the application.

Brian Newhouse , CPA is a partner at Alegria & Company PS.
He can be reached at bnewhouse@alegriacpas.com