What every mid-sized business should know about The Cloud
The Cloud is playing an increasing role in everyday business. Heather Tropman shares what she believes are the most important things for First 5000 members to know about The Cloud.
There are three things every mid-sized business should know when it comes to Cloud: (i) what it is; (ii) how it can benefit your business; (iii) potential risks to navigate. Then you’re well on your way to making an informed decision and transforming how your business pays for and uses compute power, storage and software applications.
What is cloud?
Basically, instead of running applications and saving data on your hard drive or servers in your office, you outsource this to a third party that will process and keep your data on servers they own and operate. There’s much written on the subject but I’ll stick to the 3 stack definition.
Software as a Service (SAAS) – the online delivery of business applications (ie gmail)
Platform as a Service (PAAS) – the online delivery of an application development or deployment environment where applications can be built and executed (eg Microsoft Windows Azure)
Infrastructure as a Service (IAAS) – the online delivery of virtual infrastructure components such as server processing and storage capacity (eg Macquarie Telecom’s data centre services). In this situation, you might share the infrastructure with others but your data is partitioned by secure virtual firewalls and other virtual security mechanisms.
Benefits
There’s much to be said about cost savings and only paying for what you consume, as well as turning a capital expense into an operating expense, but beyond this there is also increased scalability, flexibility and I would argue security (which you get if you use a trusted, experienced hosting provider). The Cloud is also inherently green. The concept of sharing infrastructure is environmentally friendly and means you no longer buy servers that might sit around idle during off peak times.
Risks and how to manage them
Contracts – Read them! Don’t just scroll and click to accept. Try to negotiate. Compare various cloud contracts to see what is industry standard. You may have to bite the bullet on some of the risks that get passed to consumers by all Cloud providers and part of that passing of risk is part and parcel of the commoditised nature of the service.
Location – If you prefer your data to be stored in Australia or your customers prefer it, use a local Cloud provider. A recent study by Auspoll showed that the overwhelming majority of Australians prefer to have their data kept local, so you may need to consider your customer’s preferences (not to mention your legal obligations under privacy laws).
Legals – There’s a web of legal risks in the cloud which mostly stem from cross border issues such as complying with various laws in various countries (some of which may be conflicting), offshore litigation and enforcement of your rights against a foreign company and access to your data or your customer’s data by foreign governments. These risks can largely be avoided by using a local provider that is locally owned and operated.
Tax – If transacting business offshore, consider obtaining tax advice so you don’t get an unexpected foreign tax bill. Again using local servers would solve this issue.
If you want low cost, scalable secure technology, I recommend adopting a risk based approach to cloud, navigate through the issues that may impact you or your customers, so you can start to reap the benefits Cloud has to offer.
Heather Tropman is General Counsel and Head of Data, International Data and Voice at Macquarie Telecom. She has co-authored a series of whitepapers on cloud computing and cross-border risks which have been widely quoted including in the Senate Committee’s report on privacy. Heather regularly chairs industry roundtables on cloud opportunities and risks and has been interviewed and quoted on cloud compliance issues in a variety of media outlets including participating in a Sky Business News panel and being interviewed on the Tech Report. Heather has also been a featured General Counsel in Australasian Legal Business.
