What leaders get wrong about cloud security

Local governments are increasingly turning to cloud‑based enterprise resource planning systems to modernize financial operations. But for many finance and tech leaders, questions about security, compliance and real‑world risk remain, especially as threats like phishing, fraud and data theft grow more sophisticated.

Cloud migration doesn’t automatically solve security challenges. And overlooking common missteps can leave sensitive financial data exposed in ways that have real consequences.

Misconceptions That Put Data at Risk

There’s a misconception that moving finance data to the cloud instantly solves security and compliance headaches. Modern cloud environments deliver built-in encryption, redundancy and monitoring capabilities far beyond legacy systems, but those benefits only matter if governments configure and manage them properly.

Another assumption is that all ERP vendors and cloud hosts provide equivalent protection. While choosing a reputable platform is a solid first step, protecting data depends on knowing where it resides and how security is enforced — including access controls, encryption and compliance at every layer.

The Risks You Might Be Missing

When local governments adopt cloud finance systems, the most serious vulnerabilities often come down to configuration and user behavior:

• Excessive permissions: Broad roles that grant access to sensitive data like Social Security numbers, banking details, or payroll information significantly increase exposure. Failing to enforce the principle of least privilege is a common gap.
• Assumed security features: Tools like multifactor authentication, encryption at rest and in transit, and strong password policies are often available but not fully enforced or enabled.
• Unquestioned trust in infrastructure: Understanding where data is hosted — the specific regions and cloud provider controls — and reviewing SOC, GovRAMP, or PCI DSS attestation reports from both the ERP and hosting providers can reveal configuration gaps that otherwise go unnoticed.
• Human‑targeted threats: Phishing and social engineering continue to undermine even the most secure infrastructure. A successful phishing attack on a finance team can give attackers legitimate credentials and bypass many technical safeguards.

From Compliance as a Checklist to Compliance as a Practice

Continuous compliance isn’t a box you check once; it’s an ongoing commitment. Local governments should start by choosing cloud partners that already adhere to well‑recognized frameworks — SOC 1/2, GovRAMP, PCI DSS and NIST standards — and can produce up‑to‑date audit reports on demand.

Compliance doesn’t stop there. Under the cloud’s shared responsibility model, agencies must:

• Enable and enforce security features like MFA and role‑based access controls.
• Stay current with security enhancements from their providers.
• Regularly review and adjust configurations to align with evolving regulations.

When both the vendor and the user assume responsibility, compliance becomes a sustainable discipline, not a reactive scramble.

How to Evaluate Security Readiness

To truly evaluate a cloud vendor’s security and compliance posture, finance and IT leaders should ask:

• Which compliance frameworks do you maintain, and can you share the latest reports?
• How is data protected at rest and in transit, and who manages encryption keys?
• Where is our data hosted, and how is it logically separated from other tenants?
• Do you support MFA and SSO, and how are user roles audited?
• What are your backup, recovery point and recovery time commitments?
• How do you detect, patch and communicate security incidents?

These questions provide a baseline for understanding not just the technology, but the practices that protect it. 

Cloud Migration Is More Than a Tech Upgrade

Cloud migration brings real advantages to public finance teams. Off-site backups, built-in redundancy and faster recovery timelines offer resilience many legacy systems can’t match. These capabilities help maintain continuity during outages or cyber incidents. 

But resilience isn’t automatic. Strong continuity planning still depends on people — their awareness, training and ability to respond. Security features lose impact when MFA is off or a phishing email slips through. Even the best infrastructure can be undone by simple oversights.

The strongest defense pairs smart tools with informed teams. When finance leaders understand both the technology and the risks, they’re better equipped to protect what matters most.

Matt Parks is vice president of product and strategy at Software Solutions Inc. Having worked in the software space for over 10 years, he has a proven track record of driving customer success and organizational growth through innovative product strategies. He also received a Master of Public Administration from Wright State University, giving him a unique perspective on ERP software for local governments.