As Cloud Computing Rises in Popularity, Companies Must Protect Themselves From New Risks

Cloud computing, an umbrella term for various hosted Web services, especially software as a service (SaaS), has exploded in recent years, going from a promising business concept to one of the fastest-growing segments of the IT industry. Recession-hit businesses have turned to cloud computing in droves to reap its benefits, namely increased storage, flexibility and cost reduction. SaaS providers include companies such as Oracle, Salesforce.com, Taleo, Omniture and Red Hat.

And while experts agree that cloud computing will ultimately transform today’s computing landscape, Marcus Lee, an attorney with Moore & Van Allen (Charlotte, NC), warns that companies must be vigilant about security issues and take steps to protect their data.

“With SaaS, companies are using software stored on the SaaS provider’s server and are relinquishing control of their data to that third party, making SaaS providers particularly attractive to cyber crooks,” Lee says. “It’s imperative to negotiate contracts up-front with consideration to data breaches.”

T.J. Maxx suffered a notable data breach in 2007, losing customers’ credit card and driver’s license information. The company was hit with numerous lawsuits and suffered losses in the millions. Bank of America also suffered a data breach in 2009.

However, data breaches aren’t the only concern according to Lee. Companies must take steps to protect themselves in the event that the SaaS provider goes out of business, undergoes significant outages or experiences other extended service disruptions.

Lee, who has extensive experience negotiating SaaS licensing agreements, is available for an interview or to write an article on the steps SaaS subscribers can take to protect themselves. [09/08/2010]