Small Talk: Your data may be safer in the clouds, despite the latest security furore

While the furore over the US data surveillance programme Prism raged last week, Microsoft published a little-noticed research note that suggests too many small and medium-sized enterprises in the UK may be missing out because of their anxiety about data privacy and security.

The IT giant looked at just over 200 British SMEs, of which roughly half had switched some of their operations from purely in-house computer software and hardware to cloud-based technologies. Of those, seven in 10 reported making savings as a result of the switch.

Among SMEs that have not moved towards cloud computing, no such savings were registered, of course, but the businesses in question hadn't rejected cloud because they didn't anticipate enjoying any financial benefits. Rather, more than half said they were uncomfortable with cloud computing because of concerns about data security. It's a natural enough instinct. In an era when customers and regulators are scrutinising corporate efforts to protect data ever more closely, releasing such data into an ecosystem provided and controlled by a third party – the cloud provider – no doubt feels like adding a new risk.

Many SMEs said it was the idea of losing control of their data that most spooked them. Others were worried about compliance. With cloud providers based in different jurisdictions, it's not only UK regulation to consider (though the UK view of the cloud is uncompromising, since British law makes data privacy the absolute responsibility of the company which owns it).

Here's the thing though. While it is easy to understand why a move to cloud computing would feel like a backwards step on data security for many SMEs, it's not a rational conclusion.

It's not as though British companies have been performing well on security with their current IT arrangements. The Information Commissioner's Office reports that there has been a tenfold increase in corporate data breaches over the past five years and while it doesn't offer a breakdown of how many involved companies with cloud computing technology, the fact these solutions are only just seeing widespread adoption suggests most of those breaches were on non-cloud systems.

Moreover, however hard they try, most SMEs do not have the resources or expertise to manage their IT security to the robust standards required. For this reason, switching to cloud computing will often enhance a company's security. Every provider of cloud services knows a breach of their systems is likely to spell the end of their businesses, so their interests are absolutely aligned with those of their customers. This has certainly been the experience of the SMEs surveyed by Microsoft. Of those that have switched to the cloud, 91 per cent said there had been a positive impact on their data security as a result. Nine in 10 also said they now found it easier to meet their compliance requirements.

That's not to say SMEs can simply wash their hands of security management by switching to cloud-based technologies. They should rigorously interrogate cloud providers on data privacy and security safeguards.

Nevertheless, opting to pass on the undoubted financial savings available to many SMEs from cloud computing is likely to be a mistake if the decision is made for security reasons alone. Indeed, improving data security might even be a better reason to switch.

Ironically, after Prism, there is mounting concern in the European Commission that data regulation is inhibiting the digital agenda in ways not seen in the US, where regulation is less exacting. Many British SMEs may be falling behind.

Cash-rich shell companies are busy doing nothing

Bing Crosby would no doubt approve: there is an unusually large number of companies on the Alternative Investment Market (Aim) busy doing nothing.

The Cash Shells Directory, published by Vitesse Media and Growth Company Investor, reveals there are 53 cash shells listed. Together they have cash to invest of £560m, more than twice as much as a year ago. This is cash held by companies with a listing but no trading operations, and investment companies holding more in cash than the funds allocated to portfolio holdings.

Since the directory was compiled, several new ones have emerged. They include Feedback, which has just sold its Feedback Data business, and In-Deed Online, which is selling its conveyancing operations. Both deals will leave the companies with only cash holdings.

Castle offers innovative mortgage

Specialist lenders to small businesses are trialling innovative ideas to plug the funding shortfall created by the lack of credit from some big banks.

Castle Trust today unveils the Partnership Mortgage for owners of small and medium-sized enterprises.

Castle Trust was launched two years ago with funding from private equity giant JC Flowers. Its mortgage is available to business owners who own at least 40 per cent of the equity in their homes, with lending capped at a maximum of 20 per cent of the property's value. Borrowers make no monthly repayments; instead they pay the loan back if they sell the property or at the end of the mortgage term – either way, they also have to hand over 40 per cent of any rise in the property's value to the lender as well as the original capital borrowed.

The big advantage of the deal is that the lender is focused on the business owner's property, rather than the business itself, which should make it much easier for many firms to get funding. There are potential downsides too – not least the prospect of very substantial charges if property prices rise strongly over the term of the deal. Nevertheless, all innovation in the sector is welcome.

Small Business Man of the Week: Mike Hamilton, Commando Joes'

I founded Commando Joes' in 2009. I'd spent eight years in the military and absolutely loved it, working in bomb disposal and on postings in Iraq and Afghanistan. My final job was in army recruitment. That took me into schools where I ran all sorts of team-building exercises and fun projects with the kids. I realised I was teaching skills that could be applied in any job and that's where the idea for the business came from.

"I spent my first year as a one-man band and then went on the Dragons' Den TV programme. I got turned down for funding but the dragons were very supportive; they were worried I wouldn't be able to scale the business and that I'd struggle to recruit.

"They were right – this business is all about getting the right staff. We've developed into a business that has 30 highly qualified instructors working in 120 schools all over the country.

"We work with kids of all ages, providing gentle military-style exercises and classes to focus on everything from punctuality to improving their numeracy.

"The first four years have been tough, but the business has made it. We hope to recruit up to 80 more staff over the next year or so.

VIDEO
News
people
Life & Style
The new low cost smartphone of Motorola, 'Motorola Moto G', is displayed in Sao Paulo, Brazil on November 13, 2013. The smartphone, with dimensions 65.9mm W x 129.9mm H x 6.0 - 11.6mm D is equipped with a Qualcomm Snapdragon 400 with quad-core 1,2 GHz CPU, a 4.5-inch display and Android Operating System 4.3 and a suggested price of $ 179 USD.
techData assessing smartphones has revealed tens of millions of phones are at risk of being harvested
Arts & Entertainment
Jessica Pare as Megan Draper and Jon Hamm as the troubled, melancholy Don Draper
tvAnd six other questions we hope Mad Men series seven will answer
Arts & Entertainment
Cody and Paul Walker pictured in 2003.
film
News
David Beckham is planning to build a stadium in Miami’s port for a new football team he will own
news... in his fight for a football stadium in Miami's port area
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Data Analyst - Financial services, Client data, LEI

£40000 - £50000 per annum + BONUS + BENEFITS: Harrington Starr: A leading, Cit...

Management Consultancy - Operational Research Analysts

£35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...

Corporate Actions Consultant - Market data, ISO15022, presales

£45000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: Corporate Acti...

Prudential Risk/Operational Risk Associate - London

£350 - £400 per day: Harrington Starr: An opportunity has arisen at a FCA regu...

Day In a Page

Homelessness: Why is the supported lodgings lifeline under threat?

Why is the supported lodgings lifeline under threat?

Zubairi Sentongo swapped poverty in Uganda for homelessness in Britain. But a YMCA scheme connected him with a couple offering warmth and shelter
A History of the First World War in 100 Moments: When the world’s biggest shed took over Regent’s Park

A History of the First World War in 100 Moments

When the world’s biggest shed took over Regent’s Park
The pain of IVF

The pain of IVF

As an Italian woman vows to keep the babies from someone else’s eggs, Julian Baggini ponders how the reality of childbirth is often messier than the natural ideal
Supersize art

Is big better? Britain's latest super-sized art

The Kelpies are the latest addition to a growing army of giant sculptures. But naysayers are asking what a pair of gigantic horse heads tells us about Falkirk?
James Dean: Back on the big screen

James Dean: Back on the big screen

As 'Rebel without a Cause' is re-released, Geoffrey Macnab reveals how its star perfected his moody act
Catch-22: How the cult classic was adapted for the stage

How a cult classic was adapted for the stage

More than half a century after it was published 'Catch-22' will make its British stage debut next week
10 best activity books for children

10 best activity books for children

Keep little ones busy this bank holiday with one of these creative, educational and fun books
Arsenal 3 West Ham United 1: Five things we learnt from the battle between the London sides

Five things we learnt from Arsenal's win over West Ham

Arsenal still in driving seat for Champions League spot and Carroll can make late charge into England’s World Cup squad
Copa del Rey final: Barcelona are paying for their complacency and not even victory over Real Madrid will put things right

Pete Jenson on the Copa del Rey final

Barcelona are paying for their complacency and not even victory over Real Madrid will put things right
Rafa to reign? Ten issues clay courts will serve up this season

Rafa to reign? Ten issues clay courts will serve up this season

With the tennis circus now rolling on to the slowest surface, Paul Newman highlights who'll be making the headlines – and why
Exclusive: NHS faces financial disaster in 2015 as politicians urged to find radical solution

NHS faces financial disaster in 2015

Politicians urged to find radical solution
Ukraine crisis: How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?

Ukraine crisis

How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?
A History of the First World War in 100 moments: The first execution at the Tower of London for 167 years

The first execution at the Tower of London for 167 years

A history of the First World War in 100 moments
Fires could turn Amazon rainforest into a desert as human activity and climate change threaten ‘lungs of the world’, says study

New threat to the Amazon rainforest:

Fires that scorch the ‘lungs of the Earth’
Liverpool, Chelsea and Manchester City: And the winner of this season’s Premier League title will be...

Who’s in box seat now? The winner of the title will be ...

Who is in best shape to take the Premier League prize?