Is cloud computing a viable alternative data storage system? How do the cost-cutting advantages and the legal risks balance out?

Cloud computing uses remote computers to host software and store data, which can then be accessed via the internet. It allows businesses to access IT resources, such as data storage, without having to buy expensive equipment.

“The use of cloud computing by the business world is accelerating” says Anthony Lee, a partner in the media and technology group at law firm Fladgate. “However, there are some inevitable risks which businesses need to think about.”

A business looking at cloud-based data storage must know where the data is, that it is secure and that it can be easily retrieved.

Lee says: “With privacy laws, security is a particular concern where personal data is involved.

If a retailer transfers customer data to a cloud provider, the retailer is responsible for ensuring, among other things, that the provider keeps the data safe and that it only handles the data according to the retailer’s instructions.”

Arrangements should also be underpinned by a sensible contract. “Understanding the small print is essential,” says Lee. “You don’t want to agree to terms and conditions if the provider offers you no assurances, can change those terms and conditions, and can suspend or terminate the service at will.” Such terms and conditions are not uncommon in the cloud space, Lee says, so the contract needs some attention.

Lee says: “So long as the risks can be contained, there is much to be gained from moving to the cloud. As well as the cost savings it can provide increased flexibility.” But what’s important is selecting the right partner, he adds.