This article looks at a new technology which is taking the business and IT worlds by storm: “cloud computing”. As this new industry has a lot of clients with a lot of money, it is not particularly surprising that commercial lawyers have become acutely sensitive to the cloud clients’ needs, concerns and expectations.

Why get involved in the cloud?

Small and medium sized enterprises (SMEs) have been fast to appreciate that the internet offers a golden opportunity for them, and equally lawyers have been quick to realize that they can offer specialist advice to the benefit of SMEs. Businesses remain fascinated by ‘cloud computing’.

But what is cloud computing? In the simplest of terms, it is IT-as-a-Service. Your company has access to its data and software over the internet (which in most IT diagrams is shown as a cloud). This, like many new technologies, it has its own set of benefits and challenges.

Benefits

Cloud computing fans claim five key benefits, and these contribute to the overall competitive advantage of the business.

• Cheap: your IT provider will host services for multiple companies; sharing complex infrastructure is argued to be cost-efficient, and you pay only for what you actually use. This is very attractive to SMEs.
• Quick: The most basic cloud services work ‘out of the box’ – it’s perfect for start-ups, especially in the current harsh economic client.
• Up-to-date: Most providers constantly update their software offering, adding new features as and when they become available.
• Scaleable: If your business is growing fast or has seasonal spikes, you can go large quickly because cloud systems are built to cope with sharp increases in workload.
• Mobile: Cloud services are designed to be used from a distance, so if you have a mobile workforce, your staff will have access to most of your systems on the go.

Market uptake

A report by the Centre for Economics and Business Research (CEBR), was published shortly before Christmas last year. Widespread adoption of cloud computing could give the top five EU economies a 763bn-euro (£645bn; $1tn) boost over five years; the CEBR also said it could also create 2.4m jobs. The US analysts Gartner estimates that, over the course of the next five years, businesses will spend $112 billion cumulatively on Cloud Computing.

Potential issues which businesses and lawyers can address

Cloud computing is not without potential problems.

• Usability is an important issue. Some people, firmly wedded to “their” software, whether it’s Lotus Notes or Microsoft Outlook, are reluctant to switch to plainer online applications.
• Perhaps the greatest concerns that customers face when using a cloud computing solution are those relating to security and privacy. In a traditional commercial relationship, providers will typically split up the servers for a specific customer, and a customer may even be able to impose certain physical and logical security requirements. This may not be possible once data are transferred to the cloud.
• To the extent that personal information is stored in the cloud, customers must also consider compliance with applicable laws governing the privacy and security of personally identifiable information.

Who are the providers?

Cloud computing is at an early stage, with a small group of large providers delivering a slew of cloud-based services, from full-blown applications to storage services to spam filtering. Currently, Amazon, Google and Microsoft are key suppliers of cloud services.

Further reading

An interested reader is strongly recommended to go to the ‘cloud computing’ page of Taylor Wessing LLP. Taylor Wessing LLP is one of several firms with a specialist interest in the international commercial law of cloud computing:

http://www.taylorwessing.com/download/cloudcomputing.html