Got Rogue Clouds? Yes, It Does Really Matter

Photo by Eve Livesey

Photo by Eve Livesey

January 22, 2013

Rogue Clouds: the myriad of Dropbox accounts, Salesforce.com implementations, media sharing apps, etc. that various parts of your business signup for without thinking twice and definitely without consulting IT or Legal. They happen everywhere, more often in large enterprises (83%) but also in small to medium size companies (70%) according to a recent global survey of over 3000 companies commissioned by Symantec.

Should you care? Only if you are concerned about maintaining the confidentiality of your sensitive data or worry about theft and the integrity of your websites. 40% of the companies surveyed reported disclosure of confidential information through rogue clouds. Over 25% reported account takeover issues, defacement of their web properties and other stolen property and services – all through the use of rogue clouds.

The cloud hype is relentless. It’s secure, it’s cheap, it’s the best way to store data. Even when the clouds weren’t rogue (meaning they were part of the companies’ IT strategies), the survey debunked many of those claims as well. 43% of the companies reported that they had lost data in the cloud. And what’s worse, 68% said that their data recovery operations failed. Of those that did recover their data, 22% said it took over 3 days. Hope you can operate without your data for that long – or forever.

Next, the survey showed that companies didn’t take advantage of the savings they might have gotten from their cloud storage. Companies typically pay for 6 times as much storage as they need. Plus, organizations must use additional solutions to backup their cloud data, which adds cost and inefficiencies to IT operations – and apparently doesn’t work very well.

And then there are the other risks related to how and where data is stored.

One challenge for cloud data storage is eDiscovery, pulling out the required information when a company is in litigation. 34% of the surveyed companies had eDiscovery requests for cloud data in the last 12 months, so this is why lawyers ask a few specific questions. They want to know about whether data is comingled (is your data easy to separate from other customers’ data or in other ways easy to search and retrieve only specific types of data); where the servers are located (jurisdictional issues when dealing with clouds in multi-national data centers are a nightmare); and data retention (data destruction schedules for litigation related data must be suspended until the case is resolved). The vast majority (2/3) of the companies missed their court ordered deadlines to deliver the information. 41% were never able to find or deliver the requested information. Companies reported paying fines and lost advantage in their cases as a result.

Finally, the survey also asked about privacy concerns. In the last 12 months, 23% of the respondents had been fined for privacy violations related to data stored in the cloud and over half of the companies were worried about their ability to prove they meet their privacy obligations when their data was in the cloud.

So, the potential risks that IT and the lawyers bring up about the cloud are real (isn’t it nice to know we aren’t just paranoid?). On the other hand, except for a few risk areas, about half of the cloud services worked well. So doing due diligence and choosing a good vendor are still very important.

Cindy Wolf is a Colorado lawyer with more than 25 years experience representing large and small domestic and multinational companies. Her expertise is in corporate law and commercial contracting, with an emphasis on international issues,  technology licensing and the Internet. She can be reached at cindy@cindywolf.com.

This publication is provided for informational purposes only. It does not constitute legal advice. There is no implicit guarantee that this information is correct, complete, or up to date. This publication is not intended to and does not create an attorney-client relationship between you and the author.

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When Vendors Drive You Crazy

Photo by Evil Erin

Photo by Evil Erin

January 8, 2013

Not all vendors are good at what they do – but then again, not everyone is a good customer either. When a vendor relationship goes sour, good communications become even more important. What works and what is guaranteed to make it worse? See this for the five mistakes you don’t want to make: How Not to Handle Vendor Disputes.