Cloud computing has gained considerable attention in recent years as a new way to consume applications, and it has significant advantages. Because the mailing industry as a whole covers such a wide variety of data and services, there are a wide ranging set of applications (e.g. database, CRM, billing, etc.), and plenty of opportunities to decide between on-premise and cloud computing options. When determining which type of application is best suited for each step in your mailing workflow, there are four factors that I believe lead you to an objective decision: security, availability, application requirements and total cost. The outcomes for your workflow will vary between all on-premise, all cloud computing and a mixture of both.

Security Considerations
When cloud computing is discussed, security is often the primary point of conversation. Organizations go to great lengths to ensure that their valuable data, trade secrets or other confidential information stays protected. In some cases, this is primarily driven by regulatory compliance requirements. Many organizations in the mailing industry find themselves adhering to the most stringent of precautions driven by internal need or external customer requirements, while others determine they need minimal security.

When security is important, the implications of on-premise and cloud computing must be analyzed. In the case of on-premise, the application is on a system owned by the organization, and it can be configured to function within the current context of acceptable security levels. For example, if your organization installs Microsoft Word and Excel on every computer, it is easy to decide to add PowerPoint to every system as well. Similarly, if you are working with client or in-house data on a particular computer, adding another application to that environment does not cause a significant change to where that data goes or where it is stored.

Cloud computing typically involves storing data outside of your organization's network. Each cloud computing provider is different, not just in their security measures, but also what data will be managed on their network. Two basic tasks will provide the information needed for the decision making process. First, establish what data will be stored on the vendor's system (e.g. name, address, telephone, email, invoice number, etc.), and of that data, what is protected information. If your vendor will store protected data, your second task is to ensure the vendor's security standards align with your organization's security requirements.

Given the nature of the mailing industry today, there is a wide ranging spectrum of security requirements: From highly regulated and sensitive industries like health care and finance, to marketing materials addressed to Current Resident.' Add to that, some organizations work for clients across the spectrum, which makes the analysis of security an important component of any application choice.

Many cloud computing providers are in familiar territory when it comes to common industry security standards and regulatory requirements such as SOX, HIPPA, SAS 70, SOC, ISO, and PCI. This makes it easy to ask whether a particular vendor can meet your security requirements for any particular step in your mailing workflow. If your organization does not adhere to a particular standard, it is possible a cloud computing provider who does will meet or exceed your security needs.

The frequency of use for an application can vary widely, which makes availability another important factor to consider when looking at the difference between on-premise and cloud computing. A small company may have a mailing application that a single user accesses a few times each week. Large printers and lettershops have many users accessing an enterprise level mailing application continuously. These differences in usage impact what kind of availability is necessary to keep an operation running smoothly, and the mechanics of supporting either requires dramatically different amounts of resources.

On-premise applications might seem ideal for frequent usage because they are on a local computer, and cloud computing might seem more appropriate for infrequent usage. In reality, cloud computing can provide significant benefits in high usage scenarios. Many organizations operate around the clock, and have core competencies which fall outside maintaining the hardware, application systems and infrastructure for mailing workflows. Netflix explains the company is run on nearly 100% cloud computing, primarily with Amazon Web Services. While Netflix is a technology company (that also happens to send massive amounts of First Class Mail), they decided to leave the IT heavy lifting to a trusted third party, freeing resources that might otherwise go toward maintaining high availability open for other core business tasks. Small- and medium-sized organizations would have difficulty justifying similar investments into availability in comparison to the average cloud computing provider. When an application is used infrequently and up time isn't a significant concern, there is more flexibility in availability requirements. In this case availability would not be a significant factor.

Measuring application availability is not isolated to up-time. It can also mean access. Here on-premise and cloud computing differ significantly. On-premise applications are typically physically installed and legally licensed to one specific system. If you are not near that system, it cannot be used. Cloud computing provides greater availability. As long as you have a computer with a web browser and internet access, you can access your application.

Meeting Your Objectives
Security and availability are essential, but nothing is more important than having the application meet your business objectives. Typically when people write instructions, they document the steps it takes to make an application work. When you evaluate applications, you need to understand what you need to accomplish, but the exact features may be vague. Therefore, it is important that as part of your evaluation you list the features and functionality you require. This list should include two important categories: Must have' and nice to have.' If you are evaluating a GPS navigation application must haves probably include: list of directions, map overview of route and voice guidance for each turn. The nice to have features might include: estimated time of arrival, points of interest along the route, and traffic information. Think through what you do today and how you might describe that as an application feature. This is more difficult if you have never used a particular application or are exploring new job functions, but the exercise will provide useful insights.

Making the Choice
The first three factors alone might determine whether or not you can use on-premise or cloud computing applications. If you are still left with two options, the next step is to calculate the total cost of ownership (TCO) for each option. TCO is an estimate whose purpose is to help determine direct and hidden costs of a product or system; in this case an application. The key task in calculating TCO is determining direct measurable costs as well as indirect or hidden costs related to managing either option. When calculating hidden costs, items such as support, updates, training, troubleshooting, hardware and all the other incremental costs need to be included for an accurate figure.

Hard costs like monthly or annual license fees, support fees and other fixed costs are important to the calculation as well. If comparing an incumbent solution against a potential replacement, talk to the person or team that is currently using the application. Ask them about the indirect costs and time management related to the current application. Compiling the information for each solution is challenging; however, it is worth the additional effort. Once you have gathered all costs, a simple spreadsheet with a row for each category of cost and a column for each competing application will bring valuable objective analysis to the purchase decision.

On-premise applications and cloud computing both offer significant benefits. Because of this, it is important to consider both options when building and maintaining your mailing workflow. Evaluating security, availability, application requirements and total cost will increase the chances you are leveraging the application that fits best any particular workflow component. Mailing workflows that are built with the best application at every step, will find dramatic increases in the return on time and money invested in applications.