The Perils of the Cloud

The “cloud” is hot.

We all talk about the next great thing: solutions for cloud computing. Venture Capitalists are raising new funds for cloud computing, software companies are rapidly developing new solutions for the cloud, and new services are announced every day. It is clear that since the late 1990s, we have seen a strong demand for application services in the cloud or application services hosted in the cloud, although the names have changed. “Cloud” is just the new name. The promise is great: new Internet-based applications that don’t require local implementations, opportunities for easily and quickly connecting users to new services, and simple but robust back-end management of these cloud services.

As a result, there are great new services that can make our daily business routines so much easier than before and without any upfront investment. Take one category that is strategic to all companies selling, marketing, and supporting customers: customer relationship management (CRM). Traditionally, these applications were residing on your PC or on the company’s server. The implementation of  larger sales forces was extremely complex and expensive while small businesses could live with a desktop application and home offices often used Outlook as their main depository for customer information. Now, however, for a small monthly fee we see highly complex and beneficial cloud services that offer full-featured systems only large companies could afford in the past. No setup costs, no IT investments -  just register, pay, and go. No doubt these services have improved the efficiency and effectiveness of sales organizations greatly. And some of these service companies are generating billions in revenues by satisfying the needs of their customers. Life is good.

There are, however, some questions that need serious discussions. For example, who owns the data in the cloud and can you have access to your “property” at any time? A few months ago I had an experience that gave me pause on exactly that subject.  Having had signed up for several different cloud services for sales management and marketing automation, we learned that some of them had merged to deliver improved services. As we tried to align the different contracts, we ran into a disagreement with the new company. Because we could not agree on the needed modification for one service and subsequently disagreed over the amount due, all services provided to us by the combined company were turned off. Without warning our sales came to a grinding halt. The message we received during calls to our representative was very clear: if you refuse to pay what we believe is owed under one contract, we will turn off all services. We had no choice but to pay what was demanded; the services were turned back on a few hours later.

During our disconnected state, we had no access to our customer data, our marketing programs, or any information stored on the cloud servers. If this conflict had not been resolved, we would have had no way of accessing, retrieving, or backing-up our data to local stores. And this begs the question of who owns the data in the cloud services provides by others. Is the information we create protected from use by others? Are the creations protected by copyright? Are my emails that are stored on third-party servers “my” emails or is all data owned by the service provider? The answer by some service providers is clear and manifested in their license agreements: the service provider owns all data and can do as it chooses with that data.

I love the cloud. I love cloud services. But when choosing a cloud service, it is critical to clearly understand that it can be “turned off” and you might not have the ability, nor the legal right, to retrieve any of your creative work, your collected data, or other content that you think of as “yours.”

So while I can honestly say the cloud really is a great thing, it is not a panacea. And for some cloud services, you might be better off to just say no.

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