The potential benefits of cloud technology are tangible and tempting for middle market firms. The ability to store company data in a system that can always scale up to meet rising needs is a game changer, especially for midsized companies with little room for error in their IT expenditures. What's more, the various cloud functionalities available from third-party applications allow midmarket firms to battle larger competitors on a more equal footing in critical areas, including data analytics that help inform research and development, sales, marketing and customer service. Other cloud applications improve worker efficiency, thus strengthening the bottom line.

It's important to find cloud technology and service providers tailored toward your industry and market niche.

However, each company must individually determine how much of the organization should leverage the cloud's servers, networks and individual applications. Once those considerations are made, there's the issue of choosing the right cloud provider as well as understanding the process and the terms of storing, processing and retrieving data on demand.

Strategizing to Maximize Benefits and Minimize Potential Problems

First, when deciding on which functions and data should be cloud-based, executives must balance benefits against absolute needs. If there is data or a functionality that's so central to the firm that even a temporary loss of access would be crippling, then any use of the cloud for such items must be accompanied by some form of on-site backup. Remember that issues related to the cloud provider, such as bandwidth and speed while retrieving large amounts of data, as well as issues on the user end, such as a loss of internet connectivity, can affect access to the cloud. Therefore, a firm's most critical operations and databases must remain completely in house, or there must be an internal backup that's sufficient to bridge temporary cloud downtime. Beyond those disciplines that are indispensable to the company, executives should look at the other aspects of the firm's operations and make function-by-function assessments based on cost-benefit analysis and worst-case scenarios from cloud downtime.

One informed way to approach all these considerations is to seek out a cloud service provider that has significant experience handling firms within your niche. After all, data storage needs differ between industries. If firms in a particular industry use the cloud more as a data-backup strategy rather than as a host for software applications, then cloud providers who already work with players in that field will probably have ample bandwidth to handle retrieval of large amounts of data within an acceptable time frame.

Selecting a Cloud Service Provider

Midsized firms should carefully scrutinize the service-level agreements of cloud providers before signing with any of them. Providers offer many storage levels, but their services should also include on-demand scalability to keep applications running continuously, guarantees for data and application availability, and agreements for response times to typical issues and specific security problems. Also, ask whether the provider's servers will be shared across clients or hosted on dedicated servers for each customer. Although some cloud providers offer encryption services, it is best to encrypt data in house before sending it. Lastly, executives should learn all the features that are covered in the monthly service fee, and which services incur extra charges. For instance, some providers charge for activities such as sending a firm's data to the cloud and then getting it back, which is known as "put and get." They might also charge for disaster-recovery testing as well as increased bandwidth above a specified limit. The full costs of service should be clear before a company moves a critical mass of its operations to the cloud.

Beyond these aspects, though, there is one other key consideration when selecting a cloud provider: the ease of retrieving the firm's data when transferring it from one provider to another. Cloud providers offer an initial shuttle service to get a firm's data into its cloud. However, when circumstances require that the firm remove its data from that cloud — perhaps if the contract ends and the customer chooses a new provider, or if the provider goes out of business — customers generally get little support. Given that there are no interoperability standards across the cloud technology industry, companies extracting their data should confirm that their new provider supports the data formats they're presently using. Alternatively, there are data-migration solutions that let a firm move its data directly from one cloud provider to another. There are also "cloud storage gateway" providers, which support a number of major cloud providers and can migrate data between them without complications.

Does your company host any data in the cloud? What was your primary concern when transitioning? How did you address that concern with your service provider? Let us know by commenting below.

Rob Carey is an NCMM contributor and a features writer who has focused on the business-to-business niche since 1992. He spent his first 15 years at Nielsen Business Media, rising from editorial intern to editorial director. Since then, he has been the principal of New York-based Meetings & Hospitality Insight, working with large hospitality brands in addition to various media outlets.