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Inovatec Receives SOC 1 Type I Attestation

SOC 1 Type I Attestation

Burnaby, BC, CANADA – June 7, 2019 – Inovatec Systems, a cloud-based software solutions provider, today announced that it has completed its SOC 1 Type I audit. This attestation verifies that Inovatec has the proper internal controls and processes in place to deliver high quality services to its clients.

KirkpatrickPrice, a licensed CPA firm, performed the audit and appropriate testing of Inovatec’s controls that may affect its clients’ financial statements. SOC 1 Type I is a reporting on the controls at a service organization, established by the American Institute of Certified Public Accountants (AICPA). This report is in compliance with the SSAE 18 auditing standards and focuses on the controls of a service organization that are relevant to an audit of a user entity’s financial statements. The standard demonstrates that an organization has adequate controls and processes in place. The SOC 1 Type I audit report includes Inovatec’s description of controls as well as the detailed testing of its controls.

“The successful completion of our SOC 1/2 Type I examination audits provides our clients with the assurance that the controls and safeguards we employ to protect and secure their data are in line with industry standards and best practices,” said Christian Reina, CISSP, CISM, CRISC, CISA, Information Security Officer at Inovatec.

“Many of Inovatec’s clients rely on them to protect consumer information,” said Joseph Kirkpatrick, President of KirkpatrickPrice. “As a result, Inovatec has implemented best practice controls demanded by their customers to address information security and compliance risks. Our third-party opinion validates these controls and the tests we perform provide assurance regarding the managed solutions provided by Inovatec.”

About Inovatec

Inovatec Systems provides industry leading, cloud-based software solutions for any financial institution, any type of transaction. All solutions can be brought together in a single seamless and branded platform that can be opened to external partners and customers. Capture any marketplace – Full, robust ecosystem to drive the online customer/lead to you, streamline and facilitate the processes of crediting, auditing, funding and income verification for financing applications plus full servicing & portfolio analytics in the leading-edge LMS.

About KirkpatrickPrice

KirkpatrickPrice is a licensed CPA firm, PCI QSA, and a HITRUST CSF Assessor, registered with the PCAOB, providing assurance services to over 800 clients in more than 48 states, Canada, Asia, and Europe. The firm has more than a decade of experience in information security and compliance assurance by performing assessments, audits, and tests that strengthen information security and internal controls. KirkpatrickPrice most commonly provides advice on SOC 1, SOC 2, PCI DSS, HIPAA, HITRUST CSF, GDPR, ISO 27001, FISMA, and CFPB frameworks. For more information, visit www.kirkpatrickprice.com, follow KirkpatrickPrice on Twitter (@KPAudit), or connect with KirkpatrickPrice on LinkedIn.

Michael Collins Joins Inovatec Board of Directors

BURNABY, BC, CANADA – May 30, 2019 – Inovatec Systems (“Inovatec” or the “Company”)
today announced that Michael Collins has been appointed to the Company’s Board of Directors.

Jim Case, CEO and Chairman of Inovatec said: “We are pleased to welcome Michael Collins to Inovatec’s Board of Directors. His extensive knowledge and experience in the area of Auto & Powersports finance, as well as SAAS, will help to accelerate the growth of Inovatec’s disruptive platforms as we continue to penetrate these sectors in North America.”

“We are excited to have the opportunity to work with Michael Collins as a new independent Director and board member,” said Inovatec’s Managing Partner and CTO Vladimir Kovacevic. “Michael’s unique experience and understanding of the lending industry will be a significant accelerant to Inovatec’s ability to capture new market segments and continue to provide solutions aligned with market needs.”

“I’m thrilled to be joining the Inovatec team as a board member,” said Michael Collins. “As evidenced by their impressive list of lender customers, the growth of Inovatec’s automotive & related vertical solutions has been significant. I’m excited about the future & look forward to helping the team continue to grow and expand.”

Retired from corporate life, Michael Collins has over 35 years experience in the automotive finance & software industries. Today, Michael focuses on providing strategic advice to growth-oriented companies primarily at a board of director level. Michael is a former executive with Dealertrack Technologies, a Cox Automotive brand, where he had executive responsibility for the strategic planning & execution of its credit application network, connecting automotive dealers & lenders across the U.S. & Canada. Michael was a Co-Founder and COO of Curomax Corporation – Canada’s first, and at the time of its sale to Dealertrack, the country’s largest and most successful Internet-based automotive loan origination channel. Michael also has executive level experience in the automotive finance including direct and indirect automotive lending and leasing and holds a bachelor’s degree from The University of Western Ontario.

About Inovatec Systems

Inovatec Systems provides industry leading, cloud-based software solutions for any financial institution, any type of transaction. All solutions can be brought together in a single seamless and branded platform that can be opened to external partners and customers. Capture any marketplace – Full, robust ecosystem to drive the online customer/lead to you, streamline and facilitate the processes of crediting, auditing, funding and income verification for financing applications plus full servicing & portfolio analytics in the leading-edge LMS.

2019 Sloane’s House Children’s Charity Golf Tournament

Inovatec is very proud to be the title sponsor of the Annual Sloane’s House Golf Classic again this year. Please join us Thursday, June 27, 2019.

Bring together your colleagues, clients or friends for a memorable day of great golf, networking and fundraising for a great cause. The day will feature an 18 hole scramble format, on- course activities, friendly competition and fabulous food at Deer Creek Golf Club.

Don’t miss this opportunity to help build Sloane’s House.

ABOUT SLOANE’S HOUSE

Sloane’s House vision is to provide a family-centred service that embraces the entire family, an inclusive environment where every member of the family will be encouraged to visit and spend time. A pediatric respite centre for children with complex care needs must therefore be equipped to provide the same intense care and vigilance that they receive at home. Sloane’s caregiving team will provide around the clock personalized service, from infants to teens, focusing on each child’s particular developmental needs.
Medically fragile children with complex care needs are still children and, like all children, they feel the need to see and interact with children their own age. Sloane’s House will be a place where children can enjoy life in the company of other children and friends.

Inovatec Partners with Flinks to Streamline onboarding Customers

Burnaby, British Columbia – Inovatec Systems Corp. continues to drive deeper efficiencies for lenders and enhance the customer experience through…

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Inovatec Launches Next Level Loan/Lease Management System

Burnaby, British Columbia – Inovatec Systems Corp. continues to drive the evolution of the finance transaction with the launch of their…

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Power off platform

There are many different types of computing platforms, and we are all more familiar with them than we think. In fact, we all have one of them with us all of the time – it’s our smart phones.

As a CTO of a software company I spend a fair bit of my time thinking about the technology. More specifically, about how to make the legacy technology work with current technology and how to set the foundation for the technology of tomorrow while at the same time enabling the business to grow and evolve in new and sometimes unpredictable ways. Even with a very specific focus on North America and asset based finance there are so many variations and combinations of how business models and systems fit together that it’s nearly an impossible task. That’s why I get really excited about companies that provide services or solutions that make a positive and real difference to the business. One such company is Salesforce.

While most people immediately think “CRM” when Salesforce is mentioned, the reality is that the Salesforce CRM is just the tip of the iceberg and that the real value lies beneath what’s immediately visible. I like analogies and examples – and the best one I have for Salesforce is to think about a company that invented this great and revolutionary engine that has many different applications and then in order to demonstrate the greatness of the engine put together a car. Would you classify this company as a car company? I think not. Well, thinking about Salesforce as a CRM company is the same thing.

In order to understand the importance of the “engine” and why Salesforce is not a CRM company, it is also necessary to understand the natural evolution of a software company and the software industry as a whole. I always think of it in terms of 3 specific phases.

Custom Solutions

In the early days of automation it was all about creating custom, “one-off” solutions that would meet specific business needs and address the current business model. Given a good understanding of the business problem and having a capable and competent vendor, businesses were able to create some outstanding and very unique solutions. These solutions were excellent at what they did and many of them are still around. We all know them as legacy systems. They operate without fail and they do exactly what they were designed to do. While that’s their greatest strength it’s also their greatest weakness. They do exactly what they were designed to do. This means that, without exception, these solutions are not able to adapt to new and changing business needs. Who is willing to invest time and resources on a project to add new features to a COBOL system? Especially when they know that it will never be able to do what new modern system can do – no matter how much time and money is spent.

Products

We are in a golden age of business software products – most of the systems we use in business are product based and created by a vendor that is specializing in a type of business that we are in. The main advantage of a product over custom solution is that the system is not made for any specific client. It is made for a specific industry and solves a number of use cases by offering configurable and customer managed setup. This means that vendors can keep investing into R&D and improving features, speed, security and making the product better without worrying that they will affect the business in a negative way. Just like in any industry, market forces start to dictate the pricing and only the best products survive. As a whole this is great for the business – it promotes lower operating costs and allows business to continuously improve and evolve the business model. However, this leads to a more complex business model and the need for more software products that need to be interfaced to each other and/or legacy systems in order to provide a smooth transition from one part of the business to another. It doesn’t take long to end up with a fairly complex maze of products and legacy systems that are working well and providing great value, but are very hard to replace.

Platforms

There are many different types of computing platforms, and we are all more familiar with them than we think. In fact, we all have one of them with us all of the time – it’s our smart phones. So, what makes the platform different from a product? In today’s terms, platform is anything that developers can build upon. So platforms provide an environment that in some way enables and simplifies the building of products. When it comes to our smartphones we know the products as apps.

So, why does everyone love apps? Well, for one – there are so many of them and they simplify and enhance our lives in such radical ways that they are sometimes eliminating entire industries. Having to choose between buying a $350 Garmin navigation that will be out of date within 12 months and downloading a free Google maps application that will always be accurate and never needs an update is not really much of a choice. It’s simply not a fair fight. The Google app has an entire platform to rely on – it doesn’t have to worry about the costly hardware, the sensitivity of the touch screen, the Bluetooth connectivity or any of the things that Garmin has to do before even thinking about having a product.

That is the power of the platform. We download new apps and they just work – we don’t have to configure them and make sure that they know how to use a camera and that the two buttons on the side control the volume. It all just works.

App developers love it – they can focus on what really matters and what they are good at. They can solve a problem and address a need that they identified and get their product to market very quickly. Users love it, because costs are low, selection is high and if it doesn’t work we just replace it with another app.

But that’s the world of consumer apps. The world of business apps is much more complicated and such things are not possible. Correct? Not really – given the right platform the same principles apply. So, what is the right platform – does it exist today?

More than 100,000 organizations and over 2 billion transactions per day say that Salesforce is exactly that. Salesforce is the company that has the “engine” and in order to demonstrate this great platform they built a killer CRM application on top of it. That’s why it’s wrong to think of Salesforce as a CRM company – it’s so much more.

With thousands of apps available in the Salesforce app marketplace businesses are able to pick and choose the ones they like and transform their business processes overnight. The entire platform is hosted on a cloud, always available and secure as well as instantly available on our favorite other platform – the smartphone. No integration, no development – it all just works.

Can you afford not to be in a “technology business”?

Although the song was originally written to describe a different environment than what we see today, the lyrics and the message are universally true and timeless.

Rapid changes 

Change is inevitable and a fact of life, but one thing that is different in the last 5 years is the pace of the change. We have gone from changes that take decades to notice and impact our lives, to changes that are measured in months. 

The most notable and rapid changes are technology related – so how should a modern business deal with this environment? How fast should the change be adopted? How much should be adopted? Can you afford to “wait it out”? 

The topic is complex and vast – there are many examples of change and technology adoption revitalizing the business and enabling it to soar to new heights, but there are also many examples of change having the exact opposite effect. So, what is the right answer? As with most things that truly matter – there is no simple answer, no magic “one liner” that just makes it work. However, there are guidelines and best practices that when understood and followed can guarantee a positive and successful outcome. 

Here is a simple 5 step process that will get you started in the right direction:

  1. Establish a baseline – it’s impossible to grow and change without a baseline. Rely on experts that understand both the business and the technology to perform an audit of your existing environment and give you a written report. Use this report as a baseline and starting point for any change.
  2. Determine realistic business goals for the next 3, 6, 12, 24 and 36 months. Forget about the technology and focus on the business – every good technology improvement accomplishes a very specific business goal. You must have a “big picture” – without it any solutions that are implemented will cause as many issues as they solve.
  3. Identify an in-house “technology champion” – business oriented individual(s) that understand the value and importance of technology, standardization and automation. This person or a group of people need to be able to bridge the gap between technology and business. This is one of the most difficult and sensitive roles and requires a very specific combination of business knowledge and expertise combined with a natural affinity for process improvement.
  4. Small steps – series of small changes and improvements made over time are easier to manage and control and the value of the end result is much greater than the sum of individual improvements. A word of caution; never lose sight of the “big picture” and make sure that all small projects and improvements are properly fitting and contributing to the “big picture”.
  5. Find the right balance between the “in-house” work and “off the shelf” products and don’t be afraid to use them both. This balance greatly depends on the size of the organization and is a topic for discussion in itself, but the rule of thumb is that whatever your business problem may be, others have likely faced it and solved it – so seek the industry experts and look for advice before plunging into custom solutions. More than likely, “there’s an app for that”.

The times may be changing, and at it may feel overwhelming and too complex to tackle new technologies, but luckily there are others who are currently going through the same process and others who have already done it. Peers, industry contacts and events are an excellent way to reach out to experts and ensure that changes you are making are done right and in a way that fits your unique business circumstances. When properly implemented, technology can propel businesses to extraordinary heights.

Road to Technology Transformation

The reality is that technology is advancing at an exponential rate and this means that businesses need to be able to adapt.

Not even a month ago I had an interesting conversation with my 11 year old daughter. As we were getting into the car I pulled a CD from my bag and as I was getting ready to put it into the car’s CD player my daughter asked me a simple question: “What is that?” 

It took me a few seconds to answer as I was trying to figure out if she was serious. “Surely you must know what this is – it’s a CD.” My comment was returned with a blank stare and the conversation that followed centered on “Why would anyone use that when you can download all your songs?” 

This made me think about several things, but one thing that I keep coming back to is that she and her friends will be entering the workforce in the next 8 to 10 years. This raises several interesting questions. Are today’s companies ready to meet the expectations of the younger generations in terms of the technology they use? How can a business take steps today to ensure that there is a long term benefit and alignment with upcoming technological advances? 

The reality is that technology is advancing at an exponential rate and this means that businesses need to be able to adapt at the same rate. As an example, let’s look at the history of hard drive storage. In 1956 IBM introduced a hard drive that was the size of a refrigerator, weighed more than a ton, and it had a capacity of 5MB – roughly the size of a single song. It took us another 50 years to get to the point where hard drives were small and built into personal computers but were still on average about 100MB in size. However, 10 years later hard drives are now built into everything – from a key chain to a pen, and can hold terabytes of data. Can you imagine what next 10 years will bring? 

How can businesses keep up with the rapid advances in technology and growing expectations of the young adults that are going to be entering the workforce in the next few years? Like with most complex issues, there is no “silver bullet”, no guaranteed solution. However, there are certain best practices and rules that can be followed to ensure that businesses will be in position to adopt the latest technology and take advantage of it. These practises focus on “how” rather than “what” because “what” keeps changing from year to year. 

Rule #1 – Vision Objection

In order to achieve any goal we have to be able to visualize it. This critical first step is often the one that is the most problematic and there are two reasons why. First, it is often overlooked and companies simply start to implement the best and latest technology only to find years later that they have gone down the wrong path and that it’s very costly and difficult to make a correction. The second reason is that even when companies do try to set the technology vision they are faced with an overwhelming number of options and don’t have the right resources to help with the long term technology strategy and vision. 

What is the best way to set the company’s technology strategy for the next 5 years? It comes down to people. For a smaller company it may mean relying on outside consultants and for larger businesses it may mean relying on its in-house CTO/CIO. In either case it is absolutely critical that those responsible for the technology vision and strategy also have expert level knowledge and understanding of the business. Without this ability to bridge the gap between the vision for how technology will be best leveraged, the business will never be able to take the full advantage of technology and there will always be a disconnect between the needs and the capabilities. 

Rule #2 – Documented Plan

The simple but important task of documenting the strategy and vision shouldn’t be underestimated. Taking the strategic vision and creating a written plan forces all parties involved to think about schedules and budgets. This often leads to small but important changes to the plan and ensures that there is good alignment between what’s theoretically possible and what the company can afford to do. 

It is also important to keep in mind that this documented plan is not a detailed project plan that outlines the next 5 years of tasks and activities. Rule #3 explains why something like that shouldn’t even be attempted. The plan is simply a high level outline of all types of technology that go into establishing a solid base for future growth. It covers things such as phone systems, infrastructure, staffing, software licensing, whether the company should be hosting the hardware or considering outsourcing, and should a company be buying, leasing or combination of the two? 

This plan needs to be thought of and written as a framework. A high level road map that clearly outlines the strategic vision, but is flexible enough to adapt to new technologies and new business directions. 

Rule #3 – Phased Approach

Too many companies embark on a “strategic technology transformation” that will take 5 years to complete and the first implementation of the new technology platform is in year 3. This rarely ever works out as planned. There are several simple reasons why. For starters, the technology itself is changing and moving so fast that what was a perfectly reasonable plan at the onset of the project may be completely obsolete by year 3. Secondly, to create a detailed 5 year implementation plan will take at least 6 months – this is a huge drain on the resources and since the business doesn’t stop during that time, additional dedicated project staff need to be brought on board. This raises what is guaranteed to be already a hefty price that comes with any 5 year project. 

Instead, it is easier and simpler to think of the road to transformation as a series of small journeys. The best example for this comes from a remarkable story of Colin and Julie Angus. They set on an amazing adventure with a goal to circumnavigate the globe using exclusively human power. The journey took almost two years to complete and it was filled with unexpected and unknown obstacles that included rowing across the Atlantic in a wooden rowboat and facing two hurricanes. 

I had a chance to meet Colin and Julie, and listening to their stories of how they prepared and how they handled the unforeseen obstacles made me think that there is an uncanny similarity between what they had to go through and what a typical business may have to go through during the technology transformation project. One thing that Colin and Julie made very clear is that there was no way that they could have ever thought of all possible issues that they may face and prepare for them in advance. But what they could do is have a road map and milestones that ensured they were on the right track. 

The road to technology transformation is similar and no less treacherous, but having a good strategic plan and vision that is used to establish a documented framework makes it possible to implement a series of smaller projects that in the end will take the company through the transformation and have it emerge better and more successful than what was ever thought possible.

Rule #4 – Do not reinvent

There are many sayings that convey the same message – there is no need to reinvent something that already exists and works. The whole modern society is based on building on what previous generations created and Sir Isaac Newton famously said “If I have seen further it is by standing on the shoulders of Giants.” 

Good strategic vision takes this into consideration and is based on taking the best possible technologies available and combining them in new creative ways to maximize the value they bring. 

Too many companies go down the path of developing and creating their own custom software. This is something that is not surprising and often happens with companies that are big enough to have internal IT resources. While there are exceptions that are justified any such project should be carefully considered and the company should carefully review the needs and existing solutions before embarking on a custom software project. These projects are often underestimated and result in missed deadlines, budget over-runs and eventually with a software package that is difficult to support and always two steps behind the current technology.

Rule #5 – Review, Adapt and Correct

One of the most important benefits of having a written framework and implementing through series of smaller projects is that it’s possible to stop and reflect. This is an absolutely critical step on the road to transformation and should be done after every implementation and no less than once per quarter. 

Technology changes, business goals change and people change – without being able to stop and reflect on the road already taken it would not be possible to reach the end goal of a technology transformation and still be aligned with the business needs.

While the road of technology transformation can be seen as difficult and scary it is also a great one. Companies that dare to take this journey and follow some basic and simple principles come out of it transformed not only on the technology side but the business side as well and, just like life, technological transformation is about the journey, not the destination. 

User Experience – Achieving Happy Customers

There are many different types of computing platforms, and we are all more familiar with them than we think. In fact, we all have one of them with us all of the time – it’s our smart phones.

It finally happened – in 2014 mobile device usage surpassed the desktop devices. In January mobile devices accounted for 55% of Internet usage in the United States, as reported by comScore. The majority of that activity is social media related and most activity in the business world is still done on a desktop. But there is a catch – with the increased usage of mobile devices expectations are changing and the bar is being raised.

Adaptation Is Key

Today’s customer base is getting more sophisticated, connected and empowered. As a result companies that market and sell to that customer base must grow, adapt and change their marketing strategies.
Most companies are at least intuitively aware of this and know that their approach needs to change and it needs to change quickly. Unfortunately, most of the time this need to adopt and change is recognized as a pure technology play and it is executed with technology in mind only. This means that most businesses simply invest in being present and “visible” on whatever new technology platform is getting consumer’s attention. What is being missed is that a strategy of presence is nothing more than “let’s make sure that we are there and see what happens”. As such it is ineffective and probably more damaging than helpful.

Think User Experience

As the number of digital platforms grows and as they morph and specialize, the amount of content and information available to users is growing exponentially. This means that user’s engagement and attention are in high demand and that anything they invest their time and attention into needs to have clarity, direction, reward and practicality. 

The latest results from comScore show that users engage with major social networks predominantly via mobile. Facebook engagement is at 68% via mobile, Twitter at 86% and Instagram is at a whopping 98%. What does this mean to a modern day business that is trying to reach some of these users and get their attention? 

Let’s start with an example – you invested a significant amount of time and money to grow the social media presence of the business. You even hired a dedicated young marketing expert who is getting great results and the company is generating a steady stream of tweets and posts. What would be the most desired outcome of those posts and messages? Of course, it is gaining user engagement that results in user visiting the company’s website. All good so far. But considering that the vast majority of the social media content is consumed via mobile devices, it is logical that the users will use the same device to follow the links and get to the company’s website. And this is where things start to break down. In order to keep the user engagement and provide the needed clarity and direction the website needs to be more than “compatible” with mobile. It needs to be responsive. 

What is responsive? Responsive design optimizes a website for any device. Regardless of what device is being used – a phone, tablet, laptop or a watch (yes a watch) the website is rendered in the most optimal way to ensure a seamless and uninterrupted user experience. And of all things that matter – it is the user experience that matters the most. This often overlooked and seemingly not so important part of the equation is the single most critical factor in keeping the users engaged. Why? Because expectations have changed – they have grown and gotten more sophisticated, way more sophisticated.
I often joke with our team that Apple and Google have “ruined” it for the rest of technology companies. How? By raising the bar so high that everything we do gets measured against it. No one understood this better than Steve Jobs and this simple truth that user experience is what matters the most; it is what propelled Apple to be one of the most successful companies of our time. 

Raise Your Bar 

So, how can companies achieve great user experience?
Let’s start with a definition of what the user experience is. User experience is both art and science – it involves their behaviors, feelings and emotions about using a particular system (e.g. a website). It also includes all aspects of human-computer interaction and person’s perception of system aspects like practicality and ease of use. User experience is highly subjective and it is affected by the circumstances of the environment. For example, a website that has a great user experience on a desktop may feel unorganized and completely useless on a mobile device. 

In order to achieve great user experience and get positive results of engaging the customer via social media, companies need to think of the whole experience. A great twitter post that results in customers going to a company’s website on their mobile device and finding that they have to zoom in and out and fight the interface to get to any meaningful information is nothing short of frustrating. And it has exactly the opposite effect from what was intended – customer engagement that resulted in the customer classifying the company website as not valuable. In today’s world where customers have so many choices they are very quick to classify information as valuable and not valuable and take control of what they see. If an app is not working well, or if there is a better one it gets removed. 

If a company that was previously “followed” or “liked” delivers questionable value and poor experience it is easy to “unfollow” or “unlike”. And once a customer is lost it is very hard to get their attention again. Having a responsive site that provides information in readable and useful form is an essential first step. 

The second step in providing a great user experience is content. Think about how much can be shown on a mobile device and in a way that really delivers the intended message. Going over the content of the current website and removing any unnecessary and empty content is essential. Since mobile device usage has overtaken desktop device usage to browse the internet, the website needs to be designed for mobile device first and desktop second. In today’s digital world where quantity of information that gets thrown at the average consumer is growing at an exponential rate, the old saying of “Less is more” is absolutely true. 

Happy Customers 

Unifying all marketing strategies and combining the social media team, website team, email marketing team and all other groups that may have a marketing related touch point with existing or potential customers is an important step in providing a great user experience. Sometimes combining the teams is not an option, but forming cross team committees accomplishes the same goal and it will ensure that company’s digital marketing strategy is delivered through multiple channels in a consistent manner. 

The benefits of following these steps are many. In the short term, having a responsive website that delivers clear and concise content and provides excellent customer experience will result in happy customers who are able to get the information they need by using the device of their choice. In the long term, by combining multiple teams into cross team committees the quality of digital marketing will increase and team members will benefit from each other’s experience and knowledge. Also, having a single responsive website makes it much easier to manage change and reduces the overall costs. 

In summary, providing a great user experience is the key to a positive social media engagement of current and potential customers. And having engaged and happy customers that enjoy using the services your company provides is worth a lot – ask WhatsApp, a company of 55 employees with less than $300M in annual revenue, which got acquired by Facebook for $19 Billion. 

Cloud Computing – why does it matter?

I believe that we are at the tipping point where more and more businesses are going to move their hosted infrastructure from in-house to one of the large providers.

Cloud computing has been around for more than 9 years, but it was 2006 when Amazon popularized the term with the introduction of “Elastic Cloud Computing”. This makes cloud computing mature and established technology – because as we all know 9 years in real life is like 1001 in techie years. 

That makes the question of “to use the cloud or not?” more and more dated every month. However, even to this day there are many misconceptions and a fair degree of uncertainty surrounding the whole issue. The ones I hear all the time are: “Is it secure?”, “How do I get access to my data?”, “Is it compliant with regulations?” These are all great questions and as the technology has matured the answers to these questions have been evolving. 

An example of the evolution of cloud computing, is that the services offered by Microsoft, Google or Amazon, the big three cloud providers, continue to be better, faster and cheaper. Most recently the costs have dropped to the point where it’s not possible to have a reasonable “in-house” configuration that’s comparable and competitive to what the cloud providers are offering. These recent changes make the cloud related questions even more relevant than ever. 

So, what is the cloud? This is a question that doesn’t have a simple answer that everyone can agree on, but is clearly a question that needs to be answered before we see mature businesses and industries shift to the cloud infrastructure. So, rather than focusing on a complex and unavoidably techie answer, I think it’s better to answer the question with an analogy. 

The best analogy that I recently heard was comparing cloud computing to the industrial revolution. I couldn’t agree more. Just like the industrial revolution, cloud computing is many different things to many different businesses and individuals, but overall it’s a powerful force of change that is enabling many technology start-ups to grow at astronomical rates. The best and most well-known example is Netflix whose entire infrastructure is running on Amazon’s cloud services. Last year Netflix did $5.5B in revenue and reached a truly amazing milestone of over $1M in revenue per employee. The same infrastructure they use is at the disposal of any start-up in the world for less than a cost of a new laptop per month. How awesome is that?
So why wouldn’t we all use cloud computing? Depending who we talk to there are different objections, questions and concerns that are raised. As it turns out, all of them can be grouped into two main objections: 

The Intangible Objection

Given the Netflix example, most people will agree that cloud computing is great, scalable and cost effective – but is it for “real” businesses? Is it for businesses that were around long before the cloud and all related technology even existed? How can such businesses entrust their customer and other sensitive data to something abstract like the cloud? 

This intangible objection is something that I run into all the time – and I believe that it’s caused by the abstract nature of the name used to describe this awesome modern service that allows us to outsource our infrastructure to a trusted provider. The very name “Cloud” implies that our sensitive data is somewhere out there and that we can’t really control or trust who or what has access to our data. This is why I stopped using the word “Cloud” and started to refer to this great service as “Managed Infrastructure”. 

Managed infrastructure is easy to explain and easy to understand. Take the servers you have today, which are most likely already virtual servers running on VMware, and replace the underlying hardware infrastructure that’s been managed and maintained by your in-house IT department with a hardware infrastructure that is managed by trusted providers. That’s it. It’s still your servers, completely managed and controlled by your IT department. Instead of running on your own hardware hosted at costly data centers (and most likely insufficiently redundant) these servers are now running on state of the art hardware managed by one of the big 3 providers. Better, faster, more secure and less expensive. 

The Legal Objection

This is a Canada specific objection, raised simply by the fact that infrastructure used by the three big providers is physically located in the USA. So does this matter or not? 

There are two federal laws that protect the privacy of Canadians – the Privacy Act and Personal Information Protection and Electronic Documents Act (PIPEDA). 

The Privacy Act is related to the rights to access personal information that is held by the government and as such applies only to government institutions. Therefore it doesn’t apply in this case. 

The second act, PIPEDA is the one that governs how private and public sector businesses that acquire personal data for commercial purposes need to manage such data. PIPEDA is a complex and long act, but in essence it states that a business that collects personal data for the purpose of commercial activity is fully accountable and responsible for the protection of collected data. However, it does not require all Canadian businesses to store collected data in Canada. 

In addition to PIPEDA which is a federal act, there are other provincial acts related to personal information protection that address how public companies need to handle personal information or have acts that have been declared to be “substantially similar” to PIPEDA. 

Considering the current Canadian legislation there is nothing that would prevent a private Canadian business from using managed infrastructure services offered by a company outside of Canada, as long as the Canadian business performs the same due diligence they should perform when hosting the data inside Canada. This due diligence should cover different aspects of data management such as physical security, data encryption, deletion of data after the contract is terminated, etc. 

Given that both the legal and the intangible objection can be addressed in a reasonable manner and that the cost of managed infrastructure offered by cloud providers has dropped significantly over the past few months, I believe that we are at the tipping point where more and more businesses are going to move their hosted infrastructure from in-house to one of the large providers. 

This trend has already started with a wide adoption of applications that are running on cloud based infrastructure. Odds are that either you or someone you know is already using Microsoft Office 365 and/or Salesforce.com to run their day to day business. 

So why does cloud computing matter? It matters because just like the industrial revolution, it’s fundamentally changing how business is done and what it means to be a successful modern enterprise that can attract the best talent and provide the best customer experience. 

Sources 
Provincial Canadian Geographic Restrictions on Personal Data in the Public Sector – The Center for Information Policy Leadership – Hunton & Williams LLP, 2008 http://www.hunton.com/files/Publication/2a6f5831-07b6-4300-af8d-ae30386993c1/Presentation/PublicationAttachment/0480e5b9-9309-4049-9f25-4742cc9f6dce/cate_patriotact_white_paper.pdf

FREEDOM OF INFORMATION AND PROTECTION OF PRIVACY ACT [RSBC 1996] CHAPTER 165 http://www.bclaws.ca/civix/document/LOC/complete/statreg/–%20F%20–/Freedom%20of%20Information%20and%20Protection%20of%20Privacy%20Act%20[RSBC%201996]%20c.%20165/00_Act/96165_03.xml#division_d2e3112

Office of the Privacy Commissioner of Canada – Acts and Regulations – Privacy Legislation in Canada https://www.priv.gc.ca/resource/fs-fi/02_05_d_15_e.asp