The cloud has been hailed as the panacea for all IT problems, an instant, potentially endless supply of capacity and storage available to all those with resources to fund it. However, what is often overlooked is actually how cost efficient it is to use the cloud for jobs such as file-sharing.

A recent report from PricewaterhouseCoopers (PwC) notes that, because of cloud file-sharing technologies, up to 30 percent of an IT department’s budget is spent without IT’s approval. This is due to the fact that it is so easy for an employee to log on to Dropbox, set up an account and use it for the wholesale sharing of data within an organisation.

This problem is not exclusive to file-sharing, with other cloud applications such as CRM being used and paid for by different employees throughout an organisation. Because tools such as Dropbox are free and easily accessible, IT often has no idea that these apps are being downloaded. Yet IT is still tasked with managing the security of corporate assets, as well as providing a secure alternative.

The discussion and hype around cloud computing has resulted in some organisations forgetting that there are ways to utilise existing IT infrastructure yet give the same benefits provided by cloud computing.

With file sharing, for example, on-premise solutions are available that give IT the ability to manage data with their existing assets and keep everything secure on their internal servers. The use of consumer file-sharing services can breach compliance and data protection regulations, particularly if the service’s datacentres are based outside of the EU.

Using on-premise file sharing solutions means that IT can spend less time concerned with chasing corporate data that is stored in public clouds, and more time working on mission-critical IT projects.

A survey of IT professionals by Varonis found that 74 percent of organisations don’t have procedures to track which files are put into cloud storage by users, and 56 percent believe that IT cannot accurately measure employee usage of cloud storage services.

When individuals put sensitive data at risk, the organisation pays the price. IT foots the bill for employees using consumer cloud services without proper restrictions when organisations such as the ICO and FSA review a company’s IT procedures and find compliance breaches.

A further benefit of on-premise solutions is that they are less susceptible to hacking than cloud-based solutions. In fact, researchers recently proved that Dropbox could be hacked by reading Dropbox’s code. Often, cloud-based providers write their code in Python using techniques that are meant to prevent reverse engineering.

However in the case of Dropbox the researchers were able to access the code for reverse engineering, despite the fact that it was written in Python. This means that Dropbox, along with all cloud solutions written in Python, could face an increased risk of data breaches.

For companies with sensitive information and stringent compliance obligations such as those in financial, healthcare and government industries, on-premise solutions are the straight forward answer because of the security risks associated with cloud solutions.

Even in industries with less of a security and compliance concern businesses need to consider the risk to their data and to their budgets of storing data in the cloud. Ease of access to corporate data is becoming more important in an increasingly mobile work environment, and on-premise solutions can provide that cloud-like experience, without all that unnecessary, added risk.