The Computing Cloud. Mostly this has been the bane of the CIO, CTO and other more technically minded in the enterprise. It’s been fine there as well. Few enterprises have done more than dip their toes through placing a few applications into the Cloud and seeing how it rolls out. While large enterprises will take a while longer yet to truly trust opportunities inherent in the cloud, it is happening. But there are some vital issues to consider whether you are large or small. Being independent of any vendor offering SaaS or cloud computing services lets us see what’s happening at the higher level. Here’s our views.

Moving or porting applications and data into the cloud for hosting and processing by a third party brings some powerful benefits including; faster and much lower-cost scalability, access to more processing power when needed, someone else has the headaches of uptime, servicing and upgrades and reduced power costs in terms of data centre needs. A small business gains a significant advantage in being able to deliver the quality of service that before would have required a significant CapEx investment and likely meant debt financing or further investment for a start-up. Larger businesses gain similar advantages and with sales and marketing infrastructures of scale already in place can gain revenues faster.

So with all these upsides, what are the downsides? They aren’t many, thankfully, but they are critical to note and require some thought before the CEO should sign off on a move into the cloud. The primary issues we’ve identified with our clients are;

Data Ownership: With the Patriot Act in the United States, many non-U.S. businesses are thinking twice about instances where their data is stored in the U.S. for non-U.S. operations. Even if the data is not stored in the U.S. but resides there for short periods, it can be subject to the Patriot Act. If you’re a U.S. firm with much data being managed overseas, you may still want to consider cloud services outside the U.S. Fortunately, Canada has very different privacy and digital copyright laws; it is a safer, and perhaps more cost-effective bet.

Service Level Agreements: While cloud computing offers the benefit of someone else’s data centre, Service Level Agreements (SLA’s) may be very tricky with cloud computing companies. It’s vital to read the fine print, very carefully and we recommend your legal counsel take a close look. Even cloud computing giant Amazon.com has some interesting paragraphs about uptime and downtime and guarantees. With almost all cloud computing services you’ll find that if service goes down or your data is lost, they aren’t liable.

Data Movement: if you have large and complex databases and data processing requirements, finding a good cloud service will be hard. Moving that data may be a complicated and lengthy process, especially if you’re systems have legacy AS400 and similar underneath. This is one of the primary reasons larger enterprises aren’t quite ready for cloud computing prime time.

Today, while cloud computing can no doubt offer significant competitive and cost-reduction advantages, it is still in it’s early days, much like SaaS was in the days it was called ASP at the turn of the century. We have both recommended for and against cloud computing services - it really came down to business needs, foreign business operations, complexity of data and true cost savings evaluation at the end of the day. Getting to those conclusions however, takes some serious research, consideration and planning.