One of the hottest trends in the business world's never-ending quest to cut expenses, cloud computing promises to slash IT operating costs by anywhere from 40-80% according to studies performed by the likes of Merrill Lynch, Booz Allen Hamilton, and Google. But cloud computing raises serious concerns about privacy, security, and liability that are particularly worrisome for companies with substantial intellectual property assets. Before jumping into the cloud, the risks of data loss and security breaches should be weighed carefully against the promised rewards of lower costs. In the wake of breaches suffered by Microsoft, Epsilon, Google's Gmail, and Sony's PlayStation, prospective cloud service users have to look at the issue from both sides now.

On A Clear Day

The concept of cloud computing is alluring, giving users on-demand network access to a shared pool of computing resources via the Internet. Instead of buying its own servers, software, and data storage, a company can essentially rent them from providers like Amazon, IBM, Google, and Joyent, ostensibly at a fraction of the cost.

Cloud computing is not a single type of system, but includes a variety of systems, technologies, service models, and deployment methods. Cloud systems may be deployed at the user's premises, shared by several users, hosted by a provider, or publicly accessible. The cloud system may offer a software application, a mechanism for users to create and operate their own software, or access to computing resources, such as servers or data storage. Providers can combine various forms, systems and technologies to create hybrid systems.