Will Cloud Computing Become a Regulated Industry?

The use of cloud services is becoming more and more common in businesses of all types and sizes. However, there are still many businesses who are reluctant to commit to cloud computing because of concerns, primarily over reliability and security.

For many businesses, trusting a cloud provider with something essential to everyday business processes, such as a hosted exchange server or backup of essential data, is often the most difficult step to take. From this point of view, having a set of industry standards that can help to guide buyers is potentially very positive for customers and providers alike.

As the cloud computing industry picks up more momentum, some, like the Open Data Center Alliance, are promoting the idea that it should become a regulated industry. This would standardise services offered by cloud providers and would ensure customers could trust they were buying from a reputable company in what is a new and extremely fast growing sector of the IT industry.

In the long term, regulation could lead to cloud computing becoming a utility market, where by the products on offer become so similar that they can only be differentiated by cost, levels of support and availability and quality of service. This is similar to the home broadband market or gas and electricity market, where there is very little difference in the product offered by the various suppliers, but quite a lot of variation in price and quality of service.

However, a utility market like that adopted by home internet providers would not work for cloud computing, which offers a broad range of services and products. On top of this, the target market for each product can differ significantly, from the free products aimed at home users to products aimed at large enterprises with multiple users and offices. In this way, regulations could go too far and stifle the creativity of cloud computing which would prevent it from attracting many customers who are swayed by the variability of hosted services.

A compromise must therefore be made between regulating the security, reliability and quality of service offered by cloud computing whilst not preventing it from catering to the wide variety of customers in the market.

Luckily, a study by the Cloud Security Alliance (CSA) and Information Systems Audit and Control Association (ISACA) lists changes to “government regulations…and international data privacy” as some of the top concerns of businesses when it comes to the adoption of cloud computing. This is positive news for a sector of IT and business that has a huge amount of growth potential, let’s hope it can live up to its billing.

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