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Is there an independent organization out there that insures (aka guarantees) that your "cloud" provider won't fold? (Webinar Attendee Question)

When I outsource my healthcare, driving (taxi), banking (FDIC) etc. there is an independent regulator to provide some comfort.  What about the Cloud for the enterprise?

This question was asked by an attendee during the Proformative webinar "How New Technologies are Changing the Role of Finance" held on November 6, 2012.  A video of the webinar can be viewed here:


Topic Expert
Bob Scarborough
Title: CEO
Company: Tensoft, Inc.
(CEO, Tensoft, Inc.) |

There are few guarantees in reality. We all make our best decisions and then look at risk management to mitigate the worst impacts of any potential failure. A few thoughts that may be helpful:

1) The cloud solution is really a solution stack – a data center, applications, and system administration. It all should be seamless to you as a service if it is done well – but it is still a stack for the total solution. Understanding this helps you understand and manage your risk.
2) Only the biggest (read Microsoft, Oracle, Amazon) really own their data centers. Most cloud companies are leveraging someone else’s data center. Your cloud provider most likely has plans to handle issues with their data center provider – or not. Our data center has business continuity plans as part of the total service level agreement with us – so even if they get into business trouble we will have no impact to our ability to support our customers.
3) Applications (and the related data) from most cloud providers are only available in the cloud as a service. Traditional solution providers would usually let you have the application on premise (where you were not dependent on the cloud provider) – possibly with a source code escrow to handle access to code should the application provider totally fail. Now I’m not recommending a move away from the cloud. However there are cloud solutions (like ours) that are available as a cloud service and as an on premise solution. This lets you use traditional risk mitigation options if needed – while still leveraging the scalability / cost / level of service advantages of the cloud.

So – in summary – you can ask your cloud solution providers what business continuity plans they have in place, and what options you have to get your data and/or related applications in case they are not able to provide you the service at some future date.
Hope this helps.

Bob Scarborough

Topic Expert
Donald Koscheka
Title: Principal
Company: Bluecloud Communications
(Principal, Bluecloud Communications) |

Interesting that you use the word 'insure' as opposed to 'ensure'. You might be able to insure your business against loss of data with business continuity insurance. Some of the larger hosting companies do provide some form of indemnification.

However, no one can 'ensure' that a business won't go bust. Make sure your hosting provider(s) back up their data and make it available to you in a form that you can use. Ask your provider if they can 'escrow' you data with a third party (like Iron Mountain) to ensure that you still have data even if they fold.

Your best bet is to stick with LARGE, WELL-ESTABLISHED hosting companies. It's okay to use a smaller company to get you set up (for example, you might hire a consultant to get you set up on Amazon), but you still want to be hosted at a large center.

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