Mar 022011

Cloud computing is all the rage these days with the promise of low cost and ease of use, but if your small business is contemplating using cloud computing, you need to consider the potential for security risks and data loss.

Security Risks
Personally I have had two accounts with a major online financial transaction company hacked, and illegal purchases were made. And all you have to do is a search of the news to see how many major financial institutions have had online security breaches.  Bottomline: If it can happen to these companies, who theoretically should have the best security procedures setup, then it can also happen to cloud computing companies.

My recommendation: If you are going to use cloud computing for data storage/backup, and you are backing up proprietary or sensitive data online, then encrypt the files before uploading them using a program like TrueCrypt.

Data Loss

In the last few days Google lost emails, contacts, and folders for 40,000 users of the Google email service. Google claims they will restore the lost information, and I have no doubt they will as long as the data was backed up properly, but the potential is still there for you to lose your data if it resides with a cloud computing network. And frankly this is no different than the risk of losing your data on your personal computer.

My recommendation: If you are going to use cloud computing to store files, run software programs such as office related software programs, etc., make sure you follow the same backup protocols you would use in your small business office environment. Here are some data backup steps, I outlined in a previous blog post you may find helpful.

Quite honestly with the extra risks involved with cloud computing, plus the extra steps you should take to ensure security, I would carefully evaluate cloud computing to ensure there truly is a costs savings for your small business.