Cloud Computing: Part 3 of 3: Plus and Negatives Around Cloud Computing

Part 3:  Plus and Negatives Around Cloud Computing

It is not a trivial task to migrate systems, data and users to a new system and especially one that exists in the cloud. However, companies that do so successfully achieve visibility into spending on cloud resources and manage the lifecycle for each instance, gain the ability to scale IT infrastructure capacity to meet increased demand, without capex resource costs,  and do not have to spend time waiting for IT resource.  Moreover the cloud enables companies to pay only for what it consumes, leaving it free to focus on its primary business.  A cloud based environment can also allow companies to better handle a challenging economy by providing greater business agility in terms of rapidly expansion or contraction IT capabilities.

Though difficult to quantify, the risks involving the cloud data storage are very real. For example, there is the risk of loss or damage to the data. Provisions should of course be made to deal with such problems, but there can be a business cost to any interruption in the normal flow and use of data. Litigation risks are also present. Cloud computing could lead to increased risk of litigation over certain types of data, such as a patent litigation. Of course, the costs of any litigation will include electronic discovery costs, and the company must consider whether these costs will increase as a result of the cloud and should consider whether any increased costs could potentially offset or mitigate the benefits of using the cloud

Counsel should identify how data will be collected and preserved before that data is put on the cloud. A good practice point is to record the results of the due diligence in a data map or other litigation readiness tool and store that along with the contract. Should litigation later arise, the company will be prepared.

The business units must be engaged in the entire process as well. Their most important concern should be the handling and treatment of data – how it will be stored, accessed and used. But they will also need to consider the costs. One key point often overlooked is that every cloud computing solution is unique; in a large organization, different business units may have very different needs and issues (as well as cost analyses) and store information in different ways. One possible way to divide information is to segregate information by type. One can treat e-mails differently than other data. Or, if a company uses sales data, production data, and inventory data, it may make sense to store these in unique cloud systems in order to maximize storage and usage efficiency. Thus, depending on the company, the process of implementing cloud computing may involve several different approaches.

In short, clouds can provide significant competitive advantages in use, storage and efficiency of data. But these advantages will only be realized if they outweigh the costs and risks associated with the cloud. Careful attention to these risks at the outset – before implementation of the cloud – is the key to its successful use.

* This is the second part in a three-part series which comprise an abridged version of the article on “Cloud Computing,” written by Daniel Garrie and published in the Los Angeles Daily Journal.

** To request a PDF of the complete article, please contact Law & Forensics.