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The Unthinkable Risks of the Cloud

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The Unthinkable Risks of the Cloud

By mid-2013 – meaning now -- cloud computing will be in use by about 80 percent of about 600 companies with at least 500 employees each, according to a 2012 TNS Infratest survey.

 The trend is undeniable:  Data management and storage are moving offsite to cloud computing vendors on a vast scale.

Touting cloud computing as a way to eliminate the costs of buying and maintaining on-site information-technology assets, vendors offer it in the form of software as a service (SAAS), a distribution model in which software applications are delivered to clients over a web-based network.

Offered in comprehensive, fully-integrated form, SAAS can serve the needs of entire companies through huge, web-based platforms.  As cloud computing rapidly becomes the delivery channel for software developers of all shapes and sizes to get their products to market, offering applications in a cloud is now the rule, not the exception.

A relatively small number of vendors have the service capacity to offer SaaS to big companies that want company-wide cloud computing.  The barriers to entry are formidable; only the best-capitalized vendors need apply.  Although market-share statistics are hard to come by, the list of companies large enough to offer cloud computing on this scale is short: Microsoft, Amazon, Google, Salesforce, Rackspace and not many others.

The concentration of data and virtual computing in the hands of relatively few vendors raises an important risk for their clients.  If the Internet-based systems of any one vendor are hacked, the result could be security breaches and invasions of privacy across entire industries in which their clients do business, creating liabilities on an almost unthinkable scale.

Can this small cadre of cloud-computing vendors adequately respond to the needs of their clients to quickly fix such a breach, restore services and, most importantly, cut off the damage to these clients’ own customers

Can the balance sheet of any one of these vendors protect its clients from such losses and liabilities?

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