Should I Take My Company to Cloud Computing?

Cloud computing promises to rapidly change how small businesses operate.

This is good news for owners. Equipment and software costs will plummet.

With cloud computing you won't need big modems and a suite of software for each employee's computer. Instead, you'll need just one application on a laptop and access to the Internet. That app will allow employees to log onto a web-based service that hosts all the programs they need. The computers running the cloud are in remote, secure locations, and they will run everything from e-mail to complex data analysis programs.

(You may already be using cloud computing. If you have an e-mail account with Hotmail, Gmail or Yahoo!, you log onto a web-based account remotely. The software and storage for your e-mail account don't exist on your computer. They are on the service provider's computer cloud.)

That's the good news about cloud computer.

The other side of the coin is that you will be asked to sign a contract with the service provider. Here's a word of advice: Before signing that agreement, have a lawyer review it.

Cloud computing contracts are new, and they have an abundance of snakepits and beartraps for consumer. They are written by the service provider to protect the service provider.

Here are some questions you should ask beforehand:

  • What are your service expectations, and what can you do when things go wrong?
  • Is your data secure, protected from unauthorized use, accidental loss, damage or destruction?
  • Is the value of the service provider's indemnity to you limited?
  • Does the contract hold the service provider to industry standard security requirements?
  • Do you still own the data and are your intellectual property rights protected?
  • Does the service provider have a quick and responsive take-down policy for offensive or illegal content?
  • What happens if law enforcement subpoenas your data? Will the service provider just hand it over without informing you?
  • Will the service provider be monitoring your account? Will it use your account for data analysis or operational surveillance purposes? What do these terms mean? Do you need to limit this activity?
  • What is the service provider's definition of its availability? If it promises 99.9 percent service availability, is that for a one-year or one-month period?
  • Does the contract have provisions by which you would have to indemnify the service provider? (If someone in your business is using the cloud for spamming, fraud, gambling, hacking, inserting obscene, defamatory or hate content, the service provider will not accept responsibility.)
  • How can you guarantee a smooth transition to another service provider?

Cloud computing offers small businesses significant efficiencies and cost-savings. But, as with all commercial contracts, when choosing your cloud computing solution, it's wise to retain legal counsel, assess the risks and rewards and negotiate the best deal.