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Five Things to Consider Before Embracing the Cloud

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Published: Tuesday, 13 Nov 2012 | 3:39 PM ET
By: Chris Morris | Special to CNBC.com

In theory, the cloud is great. It simplifies actions, such as billing. It lets businesses reduce their information technology costs. And it claims to be infinitely scalable.

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In the real world, though, it doesn't always work as well as advertised. Several major sites — including Reddit, Foursquare and Common Sense Media — found that out last month when Amazon's East Coast cloud servers suffered what the company called "performance issues."

Determining whether your company should shift to cloud-based resources comes down to a variety of factors and comfort levels, but before you make the jump, here are five things you'll need to keep in mind.

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Outages – The Amazon hiccups were hardly an isolated case, and they clearly demonstrated the dangers of relying completely on a single source to handle your web traffic. But the cloud is not limited to web hosting, of course. Many businesses use it as a storage method for critical files or software used on a day-to-day basis.

That means an Internet disruption on the client's end can be just as disruptive as a problem with the cloud. Outages can stop you from accessing critical data — and they always seem to happen at the worst possible time. The best protection is keeping a local backup copy of important files.

Privacy and Security – It's widely accepted that employers have the right to monitor employee email on their servers. But when those servers are virtual, employee privacy issues become a lot less clear. And differing court rulings on the matter further complicate things.

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In 2010, the New Jersey Supreme Court ruled that employees have a reasonable expectation of privacy on company computer if they used a cloud-based email program with password protection. The following year, however, a California court ruled otherwise.

"Companies would argue the fact that you're at work, but the other argument would be 'well, no, the expectation is higher on the cloud, since the company doesn't have free access to it,'" said Curtis Smolar, a partner at the Fox Rothschild law firm in San Francisco. "The most important thing for a company is to make sure there is a very clear employee manual outlining what expectation of privacy the employee has in regards to company email."

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Speed – While many cloud companies may boast about their benchmark speeds, those claims don't guarantee your site (or access to your files) will be speedy. Performance can vary wildly depending on whether your company's cloud stores your company's data on physical or virtual machines and (if virtual) how many other companies share the physical device it's stored on.

"Benchmarks that cloud providers give you can be deceptive," said Paul Schmidt, founder and president of Photodex. "With some of the hosting companies, if you know a good network admin who knows how to do benchmarks and does them, you'll find that a lot of cloud systems are really slow where it matters."

A dedicated physical machine will always be faster — though it might cost a bit more.

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In theory, the cloud is great. It simplifies actions, such as billing. It lets businesses reduce their information technology costs. And it claims to be infinitely scalable. In the real world, though, it doesn't always work as well as advertised.

   
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