Moving to the Cloud – What Has it Meant for IT Providers and Their Clients?

The cloud has now become the predominant location where businesses store data, and how IT providers supply software. Put simply, the cloud refers to software and services that run on the Internet, as opposed to locally on a computer. Below, we unpack what cloud computing is and why IT providers have taken the step towards offering their services through the cloud. We then look at some key legal considerations you should consider when providing or purchasing cloud services.

What is Cloud Computing?

Historically, businesses had to store their data and software on their own hard drives, servers and systems. However, in recent years, we have seen a surge in cloud computing. Cloud computing is the on-demand accessibility of computer resources. By using cloud computing, you can use a network of remote servers on the Internet to accumulate, manage and route data. Essentially, it means that you can access data and applications over the Internet as opposed to from your computer’s hard drive. 

This means you can access the information you store on the cloud from any device, such as your laptop or phone. 

What Services Can You Provide Over the Cloud?

There are three main types of service categories you can provide over the cloud.

Software as a Service (SaaS)

Examples of SaaS include CRM software like Salesforce and video conferencing software like Zoom.

Platform as a Service (PaaS) 

PaaS is a framework for developers that they can build upon and use to create customised applications without the complexity of building and maintaining the infrastructure typically associated with developing and launching an application. Examples of PaaS include Google App Engine and Windows Azure.

Infrastructure as a Service (IaaS) 

IaaS is a cloud service that provides basic computing infrastructure. This includes servers, storage, and networking resources. Essentially, IaaS is a virtual data centre. Examples of IaaS include Amazon Web Servers and Rackspace. 

What the Cloud Means for Providers and Clients

There is a range of reasons that businesses move to the cloud. Let us explore a few below.

Convenience 

One of the great benefits of cloud computing is the convenience of being able to log in to different software systems and access data at any moment. It means that employees can easily work from home or remotely. Additionally, individuals can log in to an array of applications the Cloud hosts, such as their bank account and social media, from their phone, at any time.

Scale 

Cloud computing provides businesses with a great opportunity to scale. For software businesses, providing software through the cloud means they can have an indefinite number of customers. It is easy to deploy, implement, customise, maintain and support software on a large scale when you are not operating it from the premises of each customer. 

Cost Savings

The cloud creates considerable cost savings for both IT providers and their clients. This is a result of the reduction in hardware and physical space for data storage. Consequently, IT providers can pass on their cost reduction to customers. No longer needing to worry about power requirements or software updates also means there is space for companies to focus on their actual business.

Security 

Consumers raised security concerns when businesses initially began moving towards the cloud. However, today, a lot of cloud-based IT providers deliver greater levels of security and data integrity than traditional on-premises models. Due to the huge investments in this area, IT providers are able to deploy mass updates relatively quickly. Further, businesses have the potential now to back up their data offsite, which reduces the potential for hackers, viruses, ransomware and other cybersecurity problems.   

Legal Considerations of Moving to the Cloud

When purchasing or supplying services on the cloud, there are several legal considerations for you to take into account.

Contracts 

A contract should be in place between the supplier and purchaser that details: 

• the services being supplied;
• any associated licences;
• how payment will work;
• the contract term; and 
• who is responsible for any risks under the contract.
   

Privacy and Security 

Businesses have privacy laws they must comply with. When entering a contract with another party, they need to ensure that the other party will help them meet their own privacy obligations. Businesses also need to consider their own privacy practices, including having an up-to-date privacy policy and inserting robust privacy clauses in their contracts.

International 

The cloud has made it easier for businesses to have customers anywhere in the world. As a result, businesses must now take an international approach to the legalities of providing their services. For example, some privacy laws, such as the GDPR, apply extraterritorially. Consequently, these laws will extend to businesses based internationally, including in Australia. 

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Key Takeaways

On the whole, moving to the cloud has led to significant innovation in the way IT providers deliver their services. These changes benefit both IT providers and their clients. This may be through the cloud’s convenience, scalability, price point and security. Whether you are an IT provider or customer, you must consider the legal impacts of using cloud services. 

If you need help with your cloud-based business, our experienced IT lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

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