By Phillip Schmandt
What questions should you ask when your IT department walks in your door with a “cloud computing” proposal that will allow you to benefit from “big data”?
The very first question you should ask is “What do you mean by “cloud computing”? Cloud computing is a term that means many different things to different people. So asking this basic question is not a stupid question, it’s a smart question.
Cloud computing generally means storing, processing and using data on remotely located computers accessed over the internet. But we have enjoyed access to remote data for decades. What then is so unique about “cloud computing”? The biggest distinction we are witnessing today is that remotely accessed data has historically focused on accessing your data on your servers via a technology that connects a remote user to those servers via the internet. Now, cloud computing envisions that your data – and the platform to use the data – stored on someone else’s servers. And that someone else may not be so ready to admit it’s your data anymore.
We have lots of examples in commerce where one person who owns something valuable (like your data) entrusts it someone else to hold for them (like your cloud services provider). Think money deposited in a bank, jewels in a safety deposit boxes or equipment stored in a warehouse. Those commercial relationships have centuries of business processes, judicial decisions (often arising from disputes) and regulations defining the obligations of all involved. Not so with cloud computing and big data. Instead, people are figuring it out as they go. Worst, the courts may not even understand the technology yet and regulations around the world are a patch work focused on very specific types of data.
With cloud computing, it is welcome to the wild, wild west. Your data is walking into the high noon corral and there is no sheriff in town. That’s not to say the cloud is a bad idea, but just that there are lots of questions to ask.
Let’s get back to the question you posed. Ask to see a diagram showing where your data will be stored, who owns the infrastructure that will hold the data, and how the data will be transmitted from one location to another. Remember, that data is not stored “in the cloud.” It is transmitted through the “cloud” (the internet), but it is always stored on a server and someone owns that server and has access rights to that server.
With that diagram in hand, you will then want to ask more questions, including:
First: “What are the benefits to our company from using cloud storage over remote access storage?” The answers need to extend beyond the saved capital costs of “renting” someone else’s hardware versus buying your own infrastructure. The answers should focus on the operational benefits to cloud storage of your data. What new productivity or services can we now enjoy that we did not in the past? What value is unleashed?
If your company sells widgets, then another way of asking this question is to step back and ask “Is the project a good technology project or is it a good widget-selling project?” The answer better be the latter.
Second: “What type of data is involved?” Is it trade secrets whose value depends on being kept secret? Is it subject to confidentiality agreements? Is it personally identifiable information? Or is it data that you want the public to be able to access? The answers to these questions will determine your needs regarding security, potential export controls, confidentiality, privacy and encryption. The answer to that question will also determine how important of a question it is to ask “where is the data going to be stored and who has access to that data”? The corollary to that question is, “who decides where the data is stored tomorrow”? As companies like SAP and Oracle expand beyond offering enterprise software systems to cloud based systems, you need to be clear that a software system you purchase to organize data internally does not contain “backdoors” to the cloud.
Fourth, “How do you manage the ‘upside” from participating in big data? If you want your data to be accessible by others and subject to their software algorithms for analysis, what value is there in that accumulation of data and how is it maximized? As massive amounts of data are collected and stored (because it is cheap to do so), what is the value in having access to all that data and how might that data be transformed or mixed with other data? If the data is in unstructured format, will anyone really want to dig through all the data and how does storing it as “structured” data maximize its potential? For some companies, the cost to “cleanse” and organize their data so it is interoperable throughout the various legacy systems of their worldwide affiliates is itself a daunting task – now how are you going to do it in a manner that provides meaningful value and access to anyone in the world?
In 2005 mankind created 150 exabytes (billion gigabytes) of data. In 2011 that figure reached 1,200 exabytes. That’s a big river of data. Be sure to ask the right questions before you jump in.
Phillip Schmandt is a partner at McGinnis, Lochridge & Kilgore in Austin, where he chairs the Technology Practice Group. He is co-chair of the Internet Cloud and IT Sub-committee of the Cyber Space Law Committee of the ABA’s Business Law Section and frequent author and speaker on issues relating to internet law.
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