Five tips for cloud computing
Posted by Stephen Bowman on 23rd February 2012
Cloud computing is set to become the phenomenon of the next decade. With Google, Amazon and Microsoft rolling out their cloud computing services, here are our top five legal tips for SME’s considering the move
What is cloud computing?
Cloud computing can take a variety of forms, but generally it is defined as the delivery of computing as a service over the internet.
Why is it popular?
The reason why innovative SMEs, particularly start-ups, are using cloud is to take advantage of its cost savings and flexibility. Users only need access to the internet and a computer, tablet or phone to benefit from a fully-functioning IT system.
All servers, platforms, storage, monitoring, maintenance, security and software are hosted by suppliers of cloud computing services. These suppliers are able to take advantage of economies of scale to deliver their services at a lower cost and better quality than what many businesses can manage alone.
Capital expenditure traditionally associated with installing servers, software and infrastructure disappear. They are replaced by payments based on use or subscription fees, which is friendlier to cash-flow.
Tips for making the switch
The decision to switch to cloud computing requires considerable analysis of the financial and practical issues involved. Here are our top five legal tips for SME’s considering the move:
Plan your exit – before you start, consider how you can exit and avoid lock-in. Switching providers may be necessary, for example, if services become slow due to oversubscription or if data security is weak.
Ensure the data transfer provisions allow an easy exit, particularly focusing on the restrictions and costs (including internet bandwidth) of retrieving all your data and transferring it to another provider, as well as the timescales involved.
Existing infrastructure – current software licences and maintenance contracts should be reviewed before being cancelled. Notice usually needs to be given to terminate these agreements and early termination charges may apply.
Additionally, employment issues can arise as employees maintaining the existing IT system may need to be allocated new roles within the business or made redundant. These employees might be entitled to claim statutory redundancy pay or, if correct procedures are not followed, bring a claim for unfair dismissal.
Buy British – or at least stick with an established provider in the UK. If a supplier’s terms and conditions are governed by English law they will be subject to implied minimum standards and unfair terms will be excluded. SME’s are also unlikely to have the time or resources to enforce their legal rights abroad if the provider is not based in the UK
Problems inevitably occur with all IT systems, which in some cases cause businesses significant financial loss, so sticking with a home-grown provider has its benefits.
Data ownership – be sure to keep the legal title to all of your data hosted on cloud computing services. Although most reputable providers will not attempt to claim ownership of your data, there are providers who may claim legal rights to the data and sell it to third parties if, for example, they do not receive payment.
Read the terms and conditions – we are all in the habit of clicking the ‘accept’ box below terms and conditions when purchasing online, but this is one contract that should definitely be read. Switching to cloud is arguably as important for SME’s as taking a new lease, so take time to know exactly what you are investing in and on what conditions.
In particular, consider whether the provider has limited its liability in the contract, or whether any charges for overuse apply. As mentioned above, also check which country’s legal system has jurisdiction over the contract. If in doubt, take advice from a professional familiar with these contracts.