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Dissecting the Limitations of "Freemium" Cloud Computing

By: Blair Felter on February 15, 2018

Both the advent of cloud computing and “freemium” business models have spiked over the years, and they’ve offered varying benefits to their businesses and users. The combination of the two trends has been especially popular, for several reasons. But freemium cloud technology comes with limitations.

The Rise of the Freemium Model

Cloud providers offer users no-cost, unlimited access to basic storage features with the option to pay for additional capacity or features. It’s an approach that IT departments like because there’s no software or hardware to purchase, install or maintain. And users benefit from universal access to their files, either on web or mobile.

Harvard Business School’s Vineet Kumar notes that “Free features are a potent marketing tool. The freemium model allows a new venture to scale up and attract a user base without expending resources on costly ad campaigns or a traditional sales force.”

One of the most prominent businesses leveraging the freemium model, Evernote recently announced that its grown from 200 million at the beginning of 2017 to 220 million users after raising its premium price by 40%. In fact, its premium subscribers are at an all-time high.

Dropbox – the popular cloud-based drive and file sharing platform that offers seamless syncing capabilities – was a trailblazer of the freemium cloud storage model. It gives its users up to 2GB of free cloud storage before charging $99 per year for up to 1TB of storage. And Dropbox’s use of the freemium model helped the platform become a prominent cloud system without putting any money into marketing.

When Benefits of Public Cloud Technology Fall Short

The ease of management, scalability and (of course) cost savings are very attractive to businesses. But many freemium cloud companies have diverse target audiences across many industries. Fittingly, their product and business models attempt to meet their customers’ general needs. And many businesses discover that public cloud storage isn’t a one-size-fits-all solution.

In fact, many high-profile companies such as Facebook and Dropbox itself are transitioning their public cloud workloads to private, on-premises environments to better address their performance and security needs.

This doesn’t mean private computing and storage is better than public, cloud file sharing. But it does mean that business and IT leaders need to consider their needs before choosing a direction. You may even join the 85% of organizations that adopted a flexible, multi-cloud architecture.

The Greatest Issue: Data Security

No matter your computing and storage environment, data security is likely one of your most important agendas. But freemium cloud services are a specific cause for concern for many IT leaders.

In a survey conducted by Gigaom, the overwhelming majority of IT professionals reported that their team members’ adoption of freemium file sync and sharing services led to security issues for their organization. And one of their biggest issues is employees who use public cloud services without the knowledge of their IT departments, which create security holes that often lead to lost or stolen data.

84% of the surveyed IT professionals expressed concern that freemium cloud storage services are leaving their businesses susceptible to data privacy issues. 46% of respondents believe data is leaking from their companies because of unmanaged file-sharing products such as Box and Dropbox. And an additional 84% of respondents confirmed that their employees’ adoption of freemium cloud services specially caused problems for their organizations.

Another common problem area is configuration errors employees make when setting up cloud-storage services. Typically, users set access permissions so that outside stakeholders can see or use their data – a vendor, for example. The GDI Foundation tracked nearly 175,000 instances of misconfigured cloud software and services in the first nine months of 2017 alone.

The universal problem to all of these security issues is that many cloud users simply don’t have the expertise to keep things as secure as they should. But don’t be quick to assume that it’s your interns causing such liabilities. It’s actually senior executives who are most likely to engage in risky file-sharing behavior, not your younger team members.

What’s The Right Solution?

While many companies will continue to leverage freemium cloud storage platforms, a combination of cloud capabilities is often the most beneficial solution. The key is to developing a strategy that meets your unique needs – and the needs of your employees.

How can you determine the most suitable multi-cloud strategy?

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