Cloud computing: Advantages and disadvantage

Posted Jun 18th 2009 3:20PM by Daleela Farina
Filed under: Industry, Google (GOOG), Microsoft (MSFT), Amazon.com (AMZN), Next Big Thing, AT and T (T), Technology

Cloud computing is a type of on-demand hosting services on the internet. Not only a necessity for mainstream e-commerce sites, it also increases efficiency, is scalable, and lowers expenses. The monetary savings may be misleading to consumers and businesses who do not fully understand the potential risks involved.

With a pay-as-you-go type structure, users are only charged for the amount of traffic, bandwidth, and memory used. Online businesses become more efficient by only utilizing the storage and space needed, while also being assured capacity for any usage increases. The buzz has been building for years, so cloud computing has attracted a diverse customer base, ranging from popular social networks such as Twitter and Facebook, to educational websites of Arizona State and Northwestern University.

Although the risks of cloud hosting vs. dedicated servers are very much the same, cloud computing carries inherent risks as personal identifiable information can be distorted, the specific location of data is unknown, and any issues are especially difficult to investigate as customers share their hosting space.

Since the laws and regulations are constantly chasing the new limitations of this technology, The Hartford Financial Services Group Inc. (NYSE: HIG) has taken the initiative by offering broad technology and cyber risk insurance to lessen the exposures of data loss, network interruptions, and technology failure in general. Drew Bartkiewicz, vice president of Cyber and New Media Risk at The Hartford refers to the unintended (and sometime intended) abuses or failures of cloud technologies as "information malpractice," a growing concern for traditional companies who are increasingly dependent on the internet, their own networks, and soon cloud computing centers. He added, "Credit is to the financial markets what privacy and trust are to the Web 2.0."

Amazon.com Inc. (NASDAQ: AMZN), AT&T Inc. (NYSE: T), Google Inc. (NASDAQ: GOOG), Microsoft Corp. (NYSE: MSFT) , NetSuite (NYSE: N), Rackspace (NYSE: RAX), and Salesforce.com (NYSE: CRM) have emerged as the top ten cloud-hosting providers. These third-party service providers may present benefits for their flexibility and IT, but your business and customer information becomes the responsibility of an outsourced company.