Thomas Eggar and James Cowper recently co-hosted the inaugural Technology and Enterprise Forum. Guest speakers included Tim Gregson, an Enterprise Architect at Microsoft, and Jamie Thompson, Head of One Net Sales at Vodafone. To celebrate the success of the event, this month's Tech Lawyer is dedicated to the cloud and some of the issues that were raised during the forum.
Clouds on the horizon
Cloud computing is clearly not new, any one who has used Hotmail, stored their photos on Flickr or uploaded content to Facebook is essentially using the cloud. The stark fact is that enterprise has been slow to move into the cloud. Preferring instead to continue using and relying on servers and software anchored to machines on site. With the cloud computing market set to be worth around $8bn by 2013, surely 2011 is the year of the cloud?
I.T. as a service
Microsoft is somewhat of a latecomer to the cloud computing party, but upon listening to their presentation at the Forum, it is clear that they have blasted in with expensive champagne and tuned right into the mood. Microsoft is well placed and well prepared to offer cloud computing on a grand scale. Using the cloud requires a sea change in thinking about IT provision. Instead of focusing on the consumables and goods that you are familiar with, Microsoft encourages you to see IT as a service. They suggest that outsourcing IT capabilities to the cloud has a number of benefits.
- Cost effective: You can convert upfront capital expenses to lower operating costs. It should be cheaper as your IT service provider will be hosting for a number of companies, providing good economies of scale.
- Scaleable: If your business is a fast grower or you require specific IT provision at certain times of the year, using cloud based apps means you have the immediate ability to scale up or down. This means your whole IT provision is instantly capable of manipulation to suit the business need. You can consume the right amount of technology without overspending.
- Mobility: Cloud services can be used by employees anywhere there is a connection to the net. So immediately you move into the cloud you have a more flexible human workforce.
- Your IT adventures can be more interesting and you can explore paths that were previously cost prohibitive.
The advice on moving to the cloud is to conduct a realistic evaluation of your current IT systems and department. If you have recently invested in a server field then it is inappropriate to suddenly move all your business applications to the cloud. If, on the other hand you are about to sign off the purchase order for your shiny new server, just pause to consider the options the cloud offers. You can move low risk apps that are not mission critical to test the water, with low cost initially.
Storm Clouds
Don't throw the baby out with the bath water; the cloud has received bad press recently with Sonygate and it maybe prudent to hold on to some of your IT capability, keep in house anything that is mission critical or comes under regulatory control. Do remember that Sony wanted to be the epicentre of the cloud movement and their ambition to effectively control the electronic DNA of their users in the cloud has been undermined, but the cloud as a provider of IT services still stands.
The Legal Cloud
Kim Walker, our Commercial and IP partner, discussed some of the legal issues that are being identified as cloud services evolve and she gave the following view: Think about this acronym when looking at cloud computing; CIA!
C – Confidentiality
Ensure any agreements you reach with your cloud provider contains effective and enforceable confidentiality provisions. Check the disclosure threshold which the provider applies in its privacy policy. Encrypting data where possible should be considered. Making sure that you have the right remedy in your agreements where breaches occur is paramount; often simple damages are not enough to put you in the position you would have been in had the breach not occurred. Instead look for remedies such as injunctions and specific performance.
I – Integrity
You have the right to insist that your data will not be lost or corrupted by the system. Think about retaining highly sensitive data in house and make sure you comply with any regulatory code on data management and storage.
A - Availability
In recent years, and in all areas of service provision to enterprise, providers are introducing the concept of Service Level Agreements (SLAs) with service credits applied on a rolling basis as a remedy for failure to perform or poor performance. This type of agreement does not suit everyone. It can weigh heavily in favour of the service provider and if your provider is consistently poor, service credits can mean you are stuck with a sub-standard service with no option but to terminate and start again. Carefully consider your options in your cloud service agreement.
The contents of this article are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.
Thomas Eggar LLP is a limited liability partnership registered in England and Wales under registered number OC326278 whose registered office is at The Corn Exchange, Baffin's Lane, Chichester, West Sussex, PO19 1GE (VAT number 991259583). The word 'partner' refers to a member of the LLP, or an employee or consultant with equivalent standing and qualifications. A list of the members of the LLP is displayed at the above address, together with a list of those non-members who are designated as partners. Regulated by the Solicitors Regulation Authority. Lexcel and Investors in People accredited.
Thomas Eggar LLP is not authorised by the Financial Services Authority. However, we are included on the register maintained by the Financial Services Authority so that we can carry on insurance mediation activity which is broadly the advising on, selling and administering of insurance contracts. This part of our business, including arrangements for complaints and redress if something goes wrong, is regulated by the Solicitors Regulation Authority. The register can be accessed via the Financial Services Authority website. We can also provide certain further limited investment services to clients if those services are incidental to the professional services we have been engaged to provide as solicitors.
Thesis Asset Management plc, our associated financial services company, provides a comprehensive range of investment services and advice. Thesis is owned by members of Thomas Eggar LLP but is independent of and separate to it. No lawyer connected with Thomas Eggar LLP provides services through Thesis as a practicing lawyer regulated by the Solicitors Regulation Authority. Thesis is authorised and regulated by the Financial Services Authority. Thesis has its own framework of investor protection and professional indemnity cover but Thesis clients do not enjoy the statutory protection of solicitors' clients.