Business executives meet cloud computing with caution

Cloud computing is trying to make inroads in Canadian companies, but most business executives are still confused by the concept, with privacy and security being the top concerns, according to a study released last week.

The legal implications of operating on an Internet-based platform, where data can be stored by outside parties or flow through two or more jurisdictions, has also long been a worry for in-house lawyers. But the reduced costs and easier access make the option to co-operate, share, and communicate through an Internet-based system increasingly attractive for Canadian companies, particularly small- to medium-sized businesses.

However, the survey conducted for CA Technologies by Leger Marketing shows 62 per cent of Canadian business executives say they are confused by the concept of cloud computing. Even the majority of those who understand its use in their companies say there must be more education on the topic.

The 525 surveyed executives say the security and privacy teams within their companies are the most likely to be opposed to adopting cloud computing. The survey also indicated a rift between business executives and IT professionals over cloud computing risks. More than 44 per cent of IT professionals say privacy is their top concern, while 35 per cent of business executives believe that’s the case.

David H. Jacobson, who wrote a paper on cloud computing for the Canadian office of PricewaterhouseCoopers LLP, says cloud-computing technology is still relatively new and in the early adopter phase for both providers and consumers. That means the best practices and guidelines have not yet been set.

“Security remains the main concern for those contemplating a move to the cloud,” he writes. “Users are warned to read the fine print when signing provider contracts.”

Nonetheless, cloud and data storage has been gaining a foothold in Canada, particularly among small businesses, where this type of infrastructure comes in handy. Almost half, or 47 per cent, of Canadian small businesses were using cloud-computing services — things like remote e-mail and messaging or data storage, according to a survey of 1,000 Canadian small business owners published last month by Angus Reid Public Opinion and Hewlett-Packard Co.

As the discussion over cloud computing in Canadian companies continues, experts say Canada also has the potential to become an international cloud-computing hub, storing data for companies across the world. Michael Geist, a law professor at the University of Ottawa, says Canada is currently behind other countries but he is optimistic about the future.

“Canada is well-positioned to become a cloud-computing leader. We already have much of the technical and privacy infrastructure in place, we are in close proximity to the U.S., and our privacy legislation meets international standards,” says Geist.

Experts also say it is important to distinguish between the public, or external, cloud and the private one stored within the company. According to the CA Technologies study, 36 per cent of IT professionals and business executives say their company is currently using private, in-house cloud, while 23 per cent are using public, or external, cloud. Due to the perceived safety net, there appears to be a greater interest in private verses public cloud computing, as 40 per cent of those surveyed say their company is aware of the public cloud, but has no plans to consider using it, versus 26 per cent who say the same about the private cloud.

But Jacobson notes greater use could likely come from a hybrid form that combines both internal and external clouds to achieve the highest flexibility.

Watch for a more detailed look at cross-border data transfers in the article “Privacy Row” appearing in the December 2010-January 2011 issue of Canadian Lawyer InHouse.

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