By Steven Perryman Run your business Head into the cloud 9 Sep 2011 Every cloud has a silver lining. And the current cloud looming over the UK business landscape potentially has one of the biggest silver linings of them all. Cloud computing is a buzz-phrase that has been exciting tech-heads and IT departments for years, but now it is going mainstream with numerous businesses – from small firms to large corporates – latching on to its potential benefits. But how does it work; what are the key attractions of using it; and are there any potential pitfalls that users need to be aware of? In its most basic terms, cloud computing is simply a new way of delivering IT services. Rather than splashing the cash to build your own IT infrastructure to host databases or software, and then employing a team of IT specialists to look after this infrastructure, a third-party provider, such as IBM, hosts these databases and software for you in a server farm. As useful as such services are, there is much more to the cloud than creating simple master documents. The cloud allows businesses to create an online space to suit their own needs. You can use a public cloud that anyone else can access or you can have a private cloud used by a single organisation. Alternatively, multiple companies can band together and run a shared private cloud. Whichever cloud option you plump for, one of the key advantages is the time and cost savings that it offers. The cost of cloud computing varies wildly depending on requirements. A company’s entry-level Development and Test Cloud costs from as little as 15 cents an hour and offers IT savings of up to 50%. In addition to the financial benefits, it’s also scalable, allowing you to manage peaks and troughs in activity more effectively. It sounds great – but there are a few issues that cloud users need to be aware of, particularly around the areas of legality and security. If you send your data into the cloud, you don’t know who is looking at it. You can encrypt data on your laptop and then send it up into the cloud, and then you can control who can see the data so it is very secure. However, a lot of cloud computing data is processed in the cloud, so there is a security risk. Many believe that such security concerns are mere mythology. An average small business is probably working with a server in a stationery cupboard, backing up every night. But they’re probably not checking if the back-up is successful and they probably don’t know how effective their firewall really is. When you’re dealing with a major cloud provider, you are dealing with a set-up in which servers are in dedicated units and the security is like Fort Knox. You can be 99.9% certain, if not 100% certain, that their security, back-up procedures and virus checking is going to be better than what you’re operating in your own office. The one area in which he admits that there remains a lack of clarity is the legal framework within which some businesses must operate. Under the terms of the Data Protection Act (DPA), companies that hold an individual’s personal details must notify the Information Commissioner’s Office that they are processing information and tell them how this information is held. A key legal requirement of the DPA is that personal data is held within the European Economic Area (EEA) or else in a country deemed to have an adequate level of data protection (see box). So if your data is in a cloud hosted in an EEA member country, the US or any one of the other approved countries, you should be fine. But if your data centre provider has a facility in, say, Mexico or China, then you will be in breach of the DPA if your data is held there. Some providers may offer assurances that information will be saved in countries that comply with legislation, but such promises cannot always be met. This will become less of a problem as third-party service providers such as IBM build networks of data centres throughout the world so that they can offer customers a truly local service. Despite its emergence, cloud computing is still a very new concept to many businesses. But not for much longer. Apple is launching itself into the marketplace with its iCloud service, so the stigma is about to dissipate. With consumers set to embrace this seemingly new concept, it’s only a matter of time before businesses follow suit. Steven Perryman is AAT Comment's former Content Editor.