One key sign that you have reached critical stage in your technology’s development is when large multi-government commissions are concerned about standardizing certain parts of your business. While some industry participants might consider this a red flat, there are also a lot of opportunities behind this news. If you look past the concerns regarding the obvious hassles this would take to fully hash out, the opportunities are immense. At the most fundamental level, the intra government agency is basically saying that your platform has arrived and your technology’s place in the economy is somewhat secure.
That is one way to read the European Commission’s latest advocacy of encouraging cloud computing companies to improve the contracts that they offer their customers. This concern is well placed. Contracts are aimed at avoiding costly legal headaches down the road. Contracts also help establish the rights of both the buyers and the sellers so that there are no nasty surprises in the future. The overall effect of clear contracts is to encourage commerce and to maximize benefits for all participants. At least that is the hope and in most commercial activities with well-developed and standardized contracts, this is the reality.
However, at some level the cloud computing industry is still at its Wild West phase. It is still at its expansion phase. Any industry in this phase of development, contracts tend to vary quite a bit from one provider to another. This is just part of the growing pains of fast developing industry. There is no surprise while cloud computing is taking off as rapidly as it is. The old model of small- to medium-sized companies buying local software to install on local hardware is fast becoming obsolete. With the increasing internet connection speeds, more and more enterprises are getting turned on to the substantial benefits of cloud-based computing. Think about it. You do not have to buy local software anymore and you do not have to buy a robust array of hardware just to run that software. You save a lot of money on personnel, a lot of money on software and a lot of money on hardware and maintenance just by going to a cloud-based computing model where you effectively rent the application that you want your company to use on time-based basis. This is extremely more economical than the older local model. More over, much of the security, update and technical issues that you used to have to spent money on the local level have been pushed to your cloud-based provider. The benefits are great. They are indisputable.
The problem is the contract for cloud-based computing it appears has not quite caught up to the benefits and reality of cloud-based computing. While consumers of these services would expect that a lot of the security, maintenance and update issues are taken cared of by the cloud-based provider, the contract might not reflect that. That is why the European Commission is urging the industry to come up with contract improvements that are more transparent and are clearer in terms of the allocation of risks. While cloud-based computing does take a lot of the risks of the computer, the provider also assumes great risks in the sense that downtime issues may lead to data corruption or data loss. Who assumes the cause of redundant data storage or backup systems or security software? Many of these have been hashed out on a verbal level and on an informal level by many providers and their customers.
What the European Commission is shooting for is that the firms need to be more proactive in coming up with better contracts. At this stage of the game, cloud computing industry members should listen to the messages that the European Commission is sending out. It is definitely a softer and easier message than a mandate. It is better to solve problems now and also come up with a standardized contract system now rather than have it pushed down your throat by government regulators later on. If you are a business, you are in better position now than if the government mandates a specific type of contract. This is definitely a golden opportunity for the industry to turn lemons into lemonade and use this as opportunity to take their business to the next level.