I told you so. I’ve been warning about this for a good while now, and this is only the beginning. In particular, if you are using web-based property management software, you should think about what you are doing. You are putting your own security, your tenants, and your property owners at risk, and probably paying a hefty monthly sum to do it.
I’m talking about the huge cyber attack that came in three waves on Friday. If you were not directly affected, it was probably (1) because the hackers didn’t bother with smaller websites or (2) because it wasn’t your turn yet. Here are some of the ones it did affect:
Airbnb
Etsy
Spotify
Twitter
The New York Times
The Financial Times
CNBC.com
Amazon
Netflix
Github
Ladies and gentlemen, these sites are no pushover sites for hackers (or are they?). Supposedly these sites are some of the best secured sites in the world, and hackers managed to get to them all at once. If these sites are vulnerable, how secure do you think your property management software website is? Most of them weren’t even around 5 years ago, and I would venture that none of them have anywhere ‘close’ to the level of cyber security protection of the sites that got invaded.
In a recent NBCNews.com post I saw the comment for consumers to “think carefully about what and when they connect devices to a cloud or even to the internet in general.” In a previous blog, I speculated on a scenario specifically for property managers called “A Day in the Life of a Property Manager Post Cyber Attack”. It is almost scary how real that seems now.
My experience is in property management and I admit it is in my financial interest for people to purchase desktop software. But the reason we have continued to offer on-premise rental property software is because there is a large market of landlords and managers that don’t want to risk their business and their client base. Plus, the monthly fees for web-based software companies are never ending, and will wind up costing a fortune in the long run.
This year, on the Buildium blog (a web-based competitor) it was stated, “Is your company at risk? Basically: yes. Every landlord, property manager, or real estate professional has access to (and stores) sensitive, confidential, personally-identifiable information on tenants and employees.”
And who is vulnerable? Basically everyone, but consider this information from the same blog “Businesses with fewer than 250 employees account for somewhere between 20-30% of all cyber attacks.”
And how easy it to recover from an attack? Read on, “60 percent of small businesses close their doors within months of a successful cyber attack.”
I LOVE technology so don’t get me wrong! We always are looking for new ways to innovate and provide our customers with the best experience possible. But that can be done without storing your valuable data on a remote server that can be attacked at any time. And when that happens, you might suddenly find yourself in an office with no access to your tenants, your owners, your vendors, your accounting, and your customers. And I ask, is that worth the risk?
My data is backed up in the cloud, right? Sure, there are redundant backups of your data. That means more servers with your information and more avenues for compromising it. Has your computer ever gone down? Well, so do servers. And when that happens, your data is inaccessible. Maybe there is a hacker attack and the server is shut down for safety reasons, or maybe the electrical grid is compromised, or a natural disaster happens, the list is endless. If you are running your application on the cloud, your business is dead in the water, and your clients have no access to their data. You can’t process any payments, pay bills, or market your business because everything your business does is done online. Maybe someday you can get the data back, but it could be days or weeks to re-enter lost information. Imaging that if your data is lost and there are hundreds or millions of other clients hosted on the same server, how long would it take to get to you?
y payments are reasonable, is the cloud a good deal? Certainly it is for the vendors. According to the research firm IDC, 2012 revenues are estimated to be 42 billion dollars and estimates for 2013 are as high as 131 billion, according to Gartner, a leading information technology research and advisory company. Consumers are used to monthly payments drafted from their bank account, but often don’t realize the eventual cost. For example, property managers that use ‘software as a service’ (SAAS) typically pay an amount per managed property, and a dollar per property is common. So, if you manage 20 rental units, you’ll pay $20.00 month. But that cost is unending, and can go up at the vendors’ discretion. You pay the increase, or else they can switch you off, effectively shutting down your business. Let’s say you pick up management on a 200 unit apartment building. Your monthly cost skyrockets to $220.00 per month, or $2640.00 per year just to 
What other factors could affect my data? There are other ways to compromise your data. One way is a malicious ‘denial of service’ where automated systems flood a server to the point that it has to shut down, leaving the customers stranded. In 2011, about 15% of all small businesses were affected by such an interruption, and a whopping 30% of all large businesses were affected. Often those attacks are not reported or even noticed if they are quickly addressed, but other attacks have caused complete outages. Another way that your data could be affected is by natural disasters at the server site, cyber attacks, and electrical grid attacks. While a customer might understand if your business was affected by a fire or hurricane, they might not understand that a server in France could affect their valuable information. If your business was affected, you could take your backups to another computer system, but your cloud data is beyond your control.
r provider promise they are online 99.5 percent of the time? That looks great, who can complain about just a .05 percent downtime? Lots of businesses can, and in fact this is only a promise usually not supported by a ‘guarantee’ that compensates you if it doesn’t work out. Doing the math you’ll find that the ‘expected’ downtime is 44 hours per year, or 3.6 hours per week that your business can’t operate if it depends on the cloud to run. However, you will still need to pay all of your employees for that time.