It's a data dilemma

By Emily Lew, December 29, 2011

The increasing volume of electronically stored information means that deciding how to store and where to locate data is a key issue for any business. Storage of vast amounts of electronic data can be expensive and inconvenient.

The advent of "cloud computing" is an example of the creative ways in which documents may now be stored.

Cloud computing essentially refers to delivering IT services over the internet. While traditional computer applications run on a PC or server, normally situated with or near the user, cloud computing runs these applications from servers in a multitude of data warehouses located all over the world.

They are delivered remotely to the user of an internet browser or remote access software. A useful example is Hotmail. Emails in a Hotmail account are not stored on the user's own computer, but are accessible from any computer with an internet connection. Those emails are stored in ''the cloud.''

Why would a business choose to use cloud computing?

● The burden of servers can effectively be outsourced, avoiding the cost of installing and maintaining hardware and software.

● A business need no longer store its data in the jurisdiction of its registered office or principal operational centre: data can be accessed from anywhere with an internet connection.

● It is cost-effective and may have environmental benefits.

However, cloud computing raises various concerns. For one, can a business be confident that its data is really secure in the cloud?

● With the cloud model, data may be split and stored temporarily in different countries at any given time. There is concern that the data could become subject to the laws of those different countries while it is stored there. This raises the possibility of regulators or investigators in those countries gaining access to the documents.

● Different data protection and document retention laws apply in different jurisdictions so complexities may arise when data is moved within the cloud from one jurisdiction to another.

● Obtaining data from the cloud can be more difficult than obtaining data from traditional storage systems.

For many small and medium enterprises (SMEs) the cloud offers flexible and affordable IT solutions but businesses should think carefully before entering into arrangements to use cloud services.

Emily Lew is a litigation associate at Herbert Smith LLP

Last updated: 11:26am, December 29 2011