Why The Anthem Breach Just Doesn’t Matter Anymore


(This post originally appeared on Forbes)

Something didn’t happen over the weekend.

By now you’ve heard of the data breach affecting up to 80 million customers at Anthem, Inc., the nation’s second-largest health insurance company, that occurred last week. 80 million! Ho-hum.  Just another day on the Internet.

The incident was just another in a continuing story of security flaws, international espionage (Chinese hackers are among the suspects), and data breaches at some of our country’s largest private and public institutions. And of course there were plenty of follow-up reports which warned us of the seriousness of the issue, questioned our ability to protect data and provided advice for consumers as to what to do. That’s what happened. But what didn’t happen was even more telling: consumers – myself, my friends, my colleagues – frowned, clucked, voiced our concerns…and pretty much shrugged it off. This weekend, like millions of others, I banked online from my laptop, I shared information with my doctor on her “secure” website, I booked train and plane tickets from my iPad and I paid for a few purchases using my smartphone.

The proliferation of data breaches have been caused by one and only one phenomena: the cloud. It’s because of cloud based computing over the past ten years that “big data” has exploded. And it’s because of the cloud that companies have chosen to house their data in all sorts of different places, with all sorts of different vendors and have undertaken to make it available in all sorts of different ways so that they can meet their customers’ insatiable demands for ease and productivity. The cloud has given hackers a plethora of resources and countless ways from which to steal.  But no one’s going to stop using the cloud of course. This is a train that has left the station and will only gain momentum in the years to come.

Sure, cloud computing in 2015 has its downsides. The obvious security concerns. The cost of migrating older systems. The lack of internal processes that exposes data. The need for more data experts and skilled technicians. And the monthly costs which can be significant for some companies. But there are just too many good reasons that support adopting the cloud. It allows companies to collect terabytes of data and expand the scalability of their systems. It gives employees and customers faster access to this data…data which is now available 24/7 and maintained by someone else who is likely more competent and experienced than yesterday’s “IT guy.” With cloud based systems companies can more easily do work coast to coast and across borders. It yields more performance and better efficiencies. The cloud has been proven to work. Its growth cannot be stopped. And if you want proof, go no further than venture capitalist Mary Meeker’s amazing presentation on The State of the Internet that she gave last year. The data she presents annually says it all.

Mobile usage is driving cloud adoption. In May 2013 11% of web page views came from mobile devices in the U.S. and by May 2014 that number had risen to 19%. In Asia it went from 23% to 37% and in Africa the number more than doubled. Sensors on iPhones and Android devices, used for transmitting and receiving data from connected, cloud based systems, have more than doubled in the past few years. And the average cost of a smartphone has declined from $430 in 2008 to $335 in 2013,with cheaper, more powerful models coming to the market every day.

The cost of the cloud has been dramatically falling. It now costs $.05 per million transistors (which provides computational power) compared to $527 (yes, $527) in 1990. Data storage costs during this same period have dropped from $569 per gigabyte to $.02 (yes, $.02). The cost of bandwidth has fallen from $1,245 per 1,000 megabytes per second to only $16. Moving and storing data on the cloud is incredibly cheap and getting cheaper.

And so adoption has exploded. There are now 2.6 billion users on the Internet, most using some type of cloud based services, compared to less than a billion only ten years ago. Data is being accumulated at a break-neck pace and yet there is still so much more to go. In fact, according to Meeker’s analysis, only 7% of the data on the Internet is “tagged” or available for analysis and only 1% has been analyzed, which is why so many millions of dollars are being plowed into “big data” startups and other companies who have plans to mash up this information into useable chunks of gold for both consumers and marketers – all to be delivered via cloud based technologies.

And the choice of our cloud options have matured. Companies can go all-in with a software-as- a-service platform, such as Salesforce.com,Google Apps or Netsuite. Or they can adopt a platform-as-a-service to develop their own solutions, using products like Microsoft Azure, or Rollbase.  Or they can create the best of both worlds, integrating SaaS and PaaS on a hosted platform-as-a-service, such as Amazon Web Services or Rackspace, where they can develop their own applications or move their existing systems to a hosted, “multi-cloud” environment.

The cloud has won. And although both businesses and consumers are wary (if not fearful) of its security concerns, its benefits are just too significant. So look for more data breaches like Anthem, more privacy intrusions (like Samsung’s eavesdropping TV)  and other attacks on our confidential information. There will be many more incidents in the years to come and serious threats to our personal liberties. And it will be because of the cloud. But please don’t complain. Because, like the Anthem breach, it doesn’t really matter anymore. We asked for this.


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