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Know The Law: Legal Considerations of Doing Business in the Cloud

Written by: Patrick C. Closson

Published in the Union Leader

Q. As a business owner, what issues should I be concerned about when contracting for cloud-based computer services?

A. Cloud-based computing is revolutionizing the storage of data and delivery of many business services, but when buying cloud-based services there are several questions a business owner should ask before signing up.

As an off-the-shelf solution, will it seamlessly integrate with your existing technology infrastructure? Most cloud-based services provide business owners with access to a certain uniform service rather than a customized licensed software solution. When evaluating cloud-based services be certain you understand what is included in the service and how this service will integrate with your existing technology infrastructure before subscribing.

What is your commitment? Most providers will request that the business agree to a minimum number or transactions or number of months of subscription. The business should closely evaluate these requests and confirm that these minimums are aligned with their needs.

Will the service be available when needed and will the performance levels be adequate? In cases where a business is using a cloud-based service for critical business operations, the business must ensure that the service will be operating at optimum capacity during peak usage time. Scheduled off-peak downtime for service updates, and disaster recovery and backup plans must also be outlined and understood.

How secure is your data? The contract must guarantee that any data that is being provided to the service provider is being maintained in a manner that complies with all applicable data security laws. In order to protect itself, businesses should review the data security measures utilized by the service provider, require notification of any changes to these security measures, and demand appropriate remedies for costs arising as a result of any data security breaches.

Can you access your data? When utilizing a cloud-based service, a business must ensure that it will have access to its data at all times, and at the data will be returned to the business in a form and format that the business can utilize when the relationship ends. In some cases the business may consider requiring the service provider to assist in the process of converting its data into a format that is useful to the business.

With these protections in writing, you can enter into contracts with cloud-based service providers with a greater degree of confidence.

Patrick Closson can be reached at [email protected].

Know the Law is a bi-weekly column sponsored by The McLane Law Firm.
We invite your questions of business law. Questions and ideas for future columns should be addressed to: Know the Law, The McLane Law Firm, P.O. Box 888, Manchester, NH 03101 or emailed to [email protected]Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.

 

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