Businesses are increasingly turning to the cloud to help improve efficiency and productivity. In fact, it's expected that nearly 80 percent of small businesses (those with fewer than 50 employees) will fully adapt to the cloud by 2020, according to Emergent Research and Intuit's Small Business Success in the Cloud report. That's up from 37 percent in 2014. But cloud-computing issues like service interruption threaten to throw your business off balance. Here's what you need to know — and what you can do to protect yourself.
About the Cloud
The cloud is an offsite network of servers that performs the functions typically handled by a local server in the office. It handles activities like running applications, storing records, backing up data, hosting email services and much more.
Potential Benefits of Cloud Computing
The appeal of cloud computing comes from its potential benefits. For example:
- More robust security protocols for data stored in the cloud than what many businesses have in place.
- Flexibility to buy more or less capacity as business needs change. This helps accommodate fluctuations resulting from new business opportunities or peak seasons. Plus, you're only paying for what you need.
- Efficiency gains, as businesses may be able to spend less on servers, software and IT resources without impacting IT service delivery to the business.
- Greater accessibility, as files stored in the cloud can be retrieved and worked on by employees at any time. Gone are the days when work couldn't move forward because a file was saved on the computer of an employee who was unexpectedly out of work.
The Dark Side of the Cloud
Picture this: The vendor hosting your cloud-based website has a software glitch, causing your website to go down for several hours. During that time, you're unable to accept online orders — those orders go to a competitor.
So, while cloud computing is revolutionizing how companies operate, no solution is perfect. In a recent study of business cloud users:
- 48 percent said their organization has experienced an interruption in cloud service.
- 56 percent of those businesses reported that at least one of these interruptions prevented their company from even functioning.
An interruption in cloud service could cause a business to lose sales, impacting their income. Help protect your business with business insurance that includes cloud service interruption coverage. It can help protect your business from risks like this by replacing lost business income if you need to suspend operations due to an unannounced and unplanned interruption in your cloud service, regardless of the reason for interruption.
As many as 40 percent of small businesses never reopen following a disaster, according to the Federal Emergency Management Agency (FEMA). For a more robust defense against a potential business issue, create a disaster recovery plan for your business in case the unexpected strikes.
A cloud service interruption — or something worse — can happen because of a software glitch or a natural disaster. Be sure you have the right plans, protocols and coverage in place to protect your business from these and other cloud-computing issues.
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The information provided in these materials is intended to be general and advisory in nature. It shall not be considered legal advice. The Hartford does not warrant that the implementation of any view or recommendation contained herein will: (i) result in the elimination of any unsafe conditions at your business locations or with respect to your business operations; or (ii) will be an appropriate legal or business practice. The Hartford assumes no responsibility for the control or correction of hazards or legal compliance with respect to your business practices, and the views and recommendations contained herein shall not constitute our undertaking, on your behalf or for the benefit of others, to determine or warrant that your business premises, locations or operations are safe or healthful, or are in compliance with any law, rule or regulation. Readers seeking to resolve specific safety, legal or business issues or concerns related to the information provided in these materials should consult their safety consultant, attorney or business advisors.
The Hartford® is Hartford Fire Insurance Company and its affiliated property and casualty insurance companies, 690 Asylum Avenue, Hartford, CT 06155.
Certain coverages vary by state and may not be available to all businesses. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd's Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. In CA by Sentinel Insurance Company, Ltd. (CA license # 8701) and its property and casualty insurance company affiliates, 690 Asylum Avenue, Hartford, CT 06155.
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