Difference between computing in-house, normal IT outsourcing and cloud computing

July 28th, 2010

Cloud computing tends to be based on virtualization of servers and storage and software that supports many companies, simultaneously.  Cloud computing is the utilization of technology infrastructure to outsource a business process through what are shared virtualized infrastructures.  The maturity of the virtualized infrastructure may magnify the challenges for organizations in operating side-by-side with competitors and/or customers.   

Many years ago, companies outsourced IBM mainframe operations to an outsourcing company and oftentimes their business process would co-exist on the same mainframes as another company.  The maturity of the software and operations associated with the IBM mainframe negated the concern now being posed by cloud computing.

 Setting aside the maturity aspects of cloud computing versus “traditional outsourcing” the location of data and processing activities may be harder to pin down when using cloud computing. Cloud providers often have data centers in countries all over the world. When talking about privacy and security laws, the location where particular data is stored, processed or transmitted can determine which countries’ privacy laws apply. The country of residence of the data subjects also matters. For example, personal information put into a cloud data center in the U.S. or another country outside the EU or EEA could be problematic under the EU Data Protection Directive and require implementation of compliance mechanisms such as Safe Harbor certification, standard contractual clauses, and/or Binding Corporate Rules. Further, data from a Canadian or EU company that is stored or processed on a U.S. server may be accessible by the U.S. Government under the USA Patriot Act. The issue of geography, therefore, needs to be carefully considered before entering into the cloud.

In the traditional outsourcing model it was simpler to track where the processing would be taking place, conduct regular audits, and companies had a firmer handle on where the data would reside.  Contracts and audits are additional differences.

Let Daniel L. Ruggles  and the team at PM Kinetics, LLC help you understand and navigate the complexities of Cloud Computing, Sourcing and Capital Planning, Vendor Management, IT Security, IT Infrastructure planning and execution.