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Cloud Computing Contracting and Compliance: Why All Privacy Pros Need to Get Up-to-Speed

The cloud is going mainstream.

Many organisations are embracing cloud computing enthusiastically as a means to improve business processes while, potentially at least, making substantial cost savings along the way. Others, meanwhile, are proceeding at a more measured pace. Cautious adopters include companies that operate in heavily regulated sectors such as financial services and healthcare, as well as many government agencies and other large organisations with substantial investments in legacy IT systems and processes.

Whatever sector you work in, however, it is time to get to grips with cloud computing and, in particular, the privacy implications of cloud procurement and deployment arrangements. Cloud services are making rapid inroads in organisations of all shapes and sizes, including many that say ”officially” they are not relying on cloud services. This is because initial adoption of cloud services often takes place under the radar of privacy and security professionals and others tasked with managing technical, legal and regulatory risks.

At first sight, cloud computing seems disarmingly simple—indeed that is one of the reasons it is so appealing. By buying infrastructure, computing platforms and software “as-a-service,” it appears that you can streamline your business processes, offload most of your capital investments in IT—or avoid them in the first place—and benefit from extraordinary flexibility in deploying the IT services you require, and in scaling them up and down, without painful and protracted procurement and contract negotiation processes. Indeed, vendors may tell you that the solutions to all of your IT needs are just a few clicks away in various user-friendly app and cloud stores.

Under the hood, things are a lot more complex.

The cloud ecosystem is already surprisingly sophisticated, and the pace of development is very fast indeed. Once you start to look at how it all works, you may soon be wondering whether you can ever know enough about cloud technologies and services to be able to assess and manage even the most obvious privacy and security risks.

On top of all that, complicated contractual arrangements between cloud service providers and their customers, as well as the potentially crucial roles of various intermediaries, often make it difficult to work out just who is responsible for what and where the buck will stop if something goes wrong. You will probably find that you have to go back to first principles to assess whether data processed in a particular part of a cloud system will be regulated as personal data or PII and, if so, who is responsible for compliance and which laws might apply to specific processing activities.

You will certainly have to decide whether you can live with one-sided, standard form, “take it or leave it” cloud contracts. If you can’t, the next question is whether you have any chance of negotiating something better. and, if so, what specific issues need most careful attention and which might be deal breakers. Many privacy regulators treat cloud contracts as just another type of outsourcing, something they have become comfortable with over the years, but is it possible that this a fundamental category error?

Written By

Christopher Millard

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  • Ramya Pillai Mar 3, 2014

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