technology extra 13 Cloudy with a chance of lawsuits
Cloud computing is an area that defies more than just good jokes. It’s one of those topics that’s much discussed and often little understood. Yet cloud computing is transforming the way we use computing services by facilitating mass public access in real time to shared data across the globe. In this article, Phil Thompson, partner at specialist corporate and technology lawyers White & Black, looks to unravel some of its mysteries
More for less?
Proponents of cloud computing say it offers ‘more for less’. They argue that by moving to cloud computing, businesses both large and small can reduce their computing budgets and move to a pay-as-you-go model whilst enjoying massive gains in performance, storage, ease of access, capacity and contractual flexibility.
They’re in pretty good company too, if recent deals and customer buying patterns are any indicator. Dell recently announced its third cloud computing acquisition of 2012 with a price tag thought to be circa $1 billion. Similarly, Symantec, IBM, Salesforce, SAP and Oracle have all made huge acquisitions in the cloud computing space, including SAP’s recent acquisition of SuccessFactors for a staggering $3.4b.
Customers are following the trend too with communications service provider Verizon, Inc. predicting that revenue for cloud computing services will reach $50b by 2015 and $150b by 2020.
Far beyond the world of business, cloud computing is making inroads into the way we share data across geographies and time- zones. A notable example is the recent project between Amazon Inc and the US National Institutes of Health to make available the 1,000 Genomes Project (the aim of which is to create the most accurate map of human genetic variation available) on Amazon Web Services (Amazon’s cloud-based service offering).
There’s little doubt that we are at a critical moment, a paradigm shift, in the evolution of mass computing.
What does this mean for you?
If the cost savings are real, then are there any risks in making the move to the cloud (whether as a supplier or as a customer) and, if so, are the risks worth taking and can they be mitigated? It’s easiest to look at the issues from the customer’s point of view but these can be applied in reverse if you’re a potential supplier of cloud computing services.
First, not all cloud computing arrangements are the same. Many companies lack the negotiating power to dictate terms to a global computing giant and as a result, buy cloud computing services on the supplier’s standard terms. These frequently fail to touch on the fundamental concerns of customers around security, service levels and termination rights. Even if you can negotiate bespoke terms, this can be a poisoned chalice as you may lose the
THE BUSINESS MAGAZINE – THAMES VALLEY – MAY 2012
protections afforded to customers dealing on a supplier’s standard terms. Yet without the ability to recall data, or control its security, or the ability to break free from an onerous contract, at what point do the cost/benefit scales start to tip?
Second, the reality of pricing models is often a far cry from the ‘pay-as-you-go’ mantra of the advertising campaigns. This isn’t necessarily a bad thing but if you believe you’re entering a contract without minimum volumes, fixed terms or up-front (or back-end) costs, make sure the contract reflects this. Similarly, you are likely to find that it is near impossible to compare two supplier propositions given the number of contract variables, so it’s wise to find an adviser who can guide you through the matrix of users, units, storage space, maintenance options and so on.
Third, consider where your data will be stored and how, and by whom, it may be accessed. This is not only a practical matter (for example, you may not be insured for data losses over the cloud), but a legal one as legislation restricts the transfer of customer and other data outside of the EEA and you may also find that using cloud storage places you in breach of your own contractual or regulatory obligations of confidentiality. There are particular issues to be navigated in highly regulated industries, notably defence, medical, financial services and in the professions.
Finally, consider the question of data security. This, and in particular the subject of so-called
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data privacy has of course been the subject of mass debate particularly since Google admitted transferring data held in its EU data centres to the US as a result of a request under the US Patriot Act. Both storage and security raise key issues about the collection of data on the cloud. Given the myriad of jurisdictions that may impact on the data in question, the location of that data is critical to determining the legal obligations that may arise from its storage and transfer. In response to growing concerns in this area, a number of suppliers now offer customers the chance to choose both the location of the data servers that will be used to store their data and the level of security required for it. Whilst this will have an impact on pricing it may be a worthwhile investment.
So, cloud computing offers a world of opportunities for customers and suppliers alike but it’s not something to jump into without some careful consideration. If, in the course of doing so, you think of a better joke about cloud computing than I could, let me know...
Details: Phil Thompson 0845-201-3147 07824-505193
Phil.thompson@
wablegal.com wablegal.com
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