Internet technology offers more and more advanced tools for small businesses and entrepreneurs seeking to improve their own efficiency, improve their products or services to their customers, and of course increase revenue. The “cloud” has been at the forefront of discussions about business and internet technology recently, as companies move some or all aspects of their business operations online. What exactly does this mean, though, and what risks and benefits should business owners consider? As business attorneys, we must particularly consider the potential of cloud computing to expose businesses to liability.
“The cloud” is shorthand for the system of cloud computing, which views computers as a service instead of a product. Rather than a licensed software package installed and used on a local computer, cloud services spread computing and software over multiple computers in multiple locations.
“Cloud storage” is the simplest form of cloud computing. This refers to storage of computer data on an off-site server, usually through an online backup or data storage provider. A more integrated form of cloud computing, often known as “platform as a service,” allows multiple users to access a common web server and computer platform online. “Software as a service” allows users to access applications and other software that are hosted offsite. The user often only needs a web browser on their local computer.
Benefit: Efficiency and convenience. A press release published in the Albany Times Union this week showcases a cloud computing service provider that has launched in New York City, offering businesses the opportunity to “fully shift their computing infrastructure into the cloud.” This would allow businesses and their employees full access to the business’ computer system from anywhere in the world with high-speed internet access at any hour of the day. This offers an obvious benefit to businesses in cutting down on the expense of maintaining computer equipment, but it also exposes businesses to certain risks.
Risk: Data security. Different companies have different needs in the area of information security. Any company providing professional services, such as medicine, law, or accounting, has very strict confidentiality requirements. While reputable cloud service providers take extensive precautions regarding data security, it is the businesses themselves who are held liable if a breach does occur. With locally-stored digital files, disconnecting from the internet can resolve many security concerns. Paper files can often be secured with a locked door.
Risk: Data efficiency. Cloud-based services have a physical location, but the user might not know where. All computing is done via the internet, and anyone who has ever tried to use a public wifi network knows that the internet’s availability is inconsistent. A business that cannot quickly and easily access its own computer infrastructure, at best, will experience annoyance. In some circumstances, however, a business could face serious legal consequences if internet interruptions cause it to miss an important deadline.
Risk: Data availability. A business cannot take advantage of its high-tech cloud infrastructure if its employees have no internet access at all. Paper files and locally-stored digital files rarely if ever suffer from off-site power outages.
Please consider these issues when reviewing options for computing systems.
The New York business attorneys at Samuel C. Berger, PC offer fixed-fee packages of legal services to businesses and entrepreneurs who want to do business in New York and northern New Jersey. To speak to a member of our skilled legal team, contact us today online or at (212) 380-8117.
The NIST Definition of Cloud Computing (PDF), National Institute of Standards and Technology, U.S. Department of Commerce, September 2011
Guidelines on Security and Privacy in Public Cloud Computing (PDF), National Institute of Standards and Technology, U.S. Department of Commerce, December 2011
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Photo credit: ‘Cloud computing’ by Sam Johnston (This vector image was created with Inkscape.) [CC-BY-SA-3.0], via Wikimedia Commons