7 factors in choosing in-house versus third party data storage

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It’s hard to get by without some kind of formal data management system. if you aren’t collecting and actively using data you’ve collected on your customers, you may not be able to reach them as well as your competitors, and if you aren’t using data to optimize your operations, you’ll be working at less-than-peak efficiency indefinitely.

However, data storage and management bring a new web of complexity to your organization. You can try to handle it all yourself by investing in a data center and recruiting the right people to handle its management, or you can pay money to an outside firm to handle those responsibilities for you.

Each approach comes with its share of advantages and disadvantages, so you should make the decision that’s right for your organization, specifically.

So which factors should you keep in mind when making this decision?

1. Your ability to monitor and troubleshoot. Assume for a moment that you’re managing your data in-house. Are you able to devote the trained resources necessary to constantly monitor your data transactions? If something goes wrong, such as a transaction that won’t complete or data that’s unexpectedly unavailable, would you be able to troubleshoot it? Third-party providers are able to monitor and troubleshoot your system on your behalf, so you don’t have to dedicate those resources from your own staff.

2. Your budget. You also need to consider your total budget. It might seem like managed services from third-party data service providers are expensive, but compare that to the cost of building your own data center—more than $200 per square foot. That also doesn’t consider the cost of ongoing management. Think about your budget carefully here—if you have the money to build a data center, it may be worth it. Otherwise, a managed service is more affordable.

3. Your growth trajectory. How fast is your business likely to grow? If you build a data solution that works for you today, will it just become obsolete in another year as you pick up your pace of expansion? One advantage of third-party storage solutions is their ability to scale with your business; if you anticipate future growth, or aren’t sure what to expect, they’re typically the better option.

4. Your need for security. How secure does your data need to be? If you’re storing some basic information about how your supply chain flows, security may not be a major concern. But it’s more likely that you’re storing some intellectual property, some customer data, or other information that would be devastating if it fell into the wrong hands. With significant investment, you can secure your own data as effectively as you’d like, but chances are, a specialist will be able to offer higher, more cost-efficient standards.

5. Your desire for control. Some executives like having their own data centers because it gives them a sense of control. You own your data in a tangible, accessible way, and you don’t have to worry about whether a service provider’s lax standards are going to put your information in jeopardy. Of course, that also means you’ll have increased accountability for your data, but for many businesses, the tradeoff is worth it.

6. Your unique needs. If you have any special needs, which aren’t likely covered by a third-party provider, don’t write them off. For example, you may need your data system to integrate with other specified systems, or you may need to make your data available in some specific way. Customizing your own solution gives you more flexibility to tackle these unique qualifiers.

7. Your willingness to hire. How willing are you to bring on additional staff members who can build, manage, and maintain your data center? Employees are a major cost, and they add complexity to your business. For some companies, they’re a practical necessity well worth the investment, but for others, they’re a risk. Think about this; how are you going to tell who’s qualified to manage your data center? Would you sacrifice having a specific skill in order to pay a lower salary?

A Hybrid Approach?

If you find yourself on the fence with some of these issues, you should note it is possible to take a hybrid approach. You might build a small data center to house your most important data, such as your intellectual property, while utilizing a third-party cloud platform for the remainder of your data needs. This is only optimal for a minority of organizations, but is an option worth considering.

For most modern organizations, working with a third-party specialist is the better choice—both financially and logistically. Weigh your options carefully, and work with a partner you can trust.

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