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Considering all the benefits offered by the cloud, making the transition may appear inevitable to enterprises

Cloud computing is at the forefront for many organizations across the world. Experts believe it is the future of IT. Considering all the benefits offered by the cloud, making the transition may appear inevitable to enterprises. But just like any major technology, it also comes with certain caveats - security and privacy of business data and legal compliance among others. While these concerns are now well known, the most obvious disaster that can befall a business depending on cloud computing is still largely overlooked - what happens when the cloud provider shuts shop?

Consumers have already woken up to this scenario when Google shut down its popular RSS aggregator Reader. A cloud service provider may close its doors for any number of reasons: bankruptcy, business failure, breach of contract, being acquired by a bigger company or even regulatory problems. If the provider is located in another country or is privately held, the risks are even higher.

Whatever the reason, the result is a nightmare scenario for its users. They could lose data, applications that were built on top of cloud platforms and critical processes such as billing and accounting. If a company has mission critical applications in the cloud, making the move to another provider may have numerous technical hurdles. Even if it is feasible, it will be costly and time consuming. In the meantime, they have to deal with angry customers and potentially huge revenue losses.

Many suppliers will provide recovery solutions for the data held in their servers, which may not be of much use if the system itself fails. There are some very important questions that companies must ask the cloud provider before they begin using SaaS/cloud systems:

  • Can the data be recovered if the system is unavailable for any reason, including business failure?
  • Will the recovered data be usable without the system to access it?
  • How long and how much will it take to switch to another provider?

One solution providers offer are Service Level Agreements, also known as SLAs. The SLA sets standards against which services delivered can be measured such as uptime in a month and also specifies service credits or compensation if the terms are not met. While useful for temporary disruptions, businesses should keep in mind that they are not air-tight guarantees, especially if the provider goes into liquidation.

Another way to address a critical system failure is a cloud escrow agreement. Under these agreements, the source code and operational components of the system are kept in a secure server or repository. If a disaster should happen, such as vendor shutdown, then the code is released to the users. Still, rebuilding cloud systems from source code can be a complex and lengthy process.

While cloud computing may simplify IT management from a business perspective, it makes robust recovery planning and business continuity more difficult. To reduce risks, companies should decide what they want from a cloud vendor, talk to them, delegate responsibility and have an action plan ready, if and when disaster strikes.

More Stories By Chris Smith

Chris Smith is a cloud specialist based in NYC. He is the creator of leading cloud review website Best Cloud Hosting