SA looks into cloud security

The recent growth in interest in cloud computing could be attributed to its cost-effectiveness.

This is in light of application development, maintenance, data storage and IT infrastructure in the cloud being in the hands of third-party service providers with the service being completely scalable according to an organisation's needs.

However, according to the technology director at Deloitte, Robbie Quercia, one of the main concerns raised about migrating to the cloud is data security. “We advise clients to take a holistic view of security; keeping it in mind in relation to the business process being migrated,” he says.

To keep security concerns under control, we usually recommend that clients migrate low risk applications to the cloud until such a time that the experience has proved itself safe, he says.

“Ironically, security is often better in the cloud than in many in-house managed environments primarily as a result of the focus cloud service providers afford to it, given that is it seen as a major 'trade barrier,'” he points out.

According to Quercia, it is 'somewhat ironic' that most organisations have concerns around the potential security risks posed by cloud computing when their employees are using cloud applications such as Gmail, Facebook or LinkedIn from their desktops without any major problems.

“The reality is that most enterprises have already put their faith in the cloud, and we can help them refine their processes and maximise their budgets by adopting the cloud in a structured way and layering security to ensure that all confidential data remains that way,” he adds.

The location of data and where transactions are taking place also raise tax and legal compliance issues for organisations, he says. “In the SA context, there might also be exchange control implications for e-commerce transactions.”

Tax director at Deloitte, Billy Joubert, says one of the salient issues is that by switching to a cloud computing option, IT expenditure may move from capital expenditure to operating expenditure on the balance sheet, which obviously changes the tax implications.

“An additional point is that the selection of a cloud computing solution within a multi-national group may well affect the transfer pricing implications of IT charges which flow within the group. It is necessary to consider all potential tax implications. For example, place of supply may well be an issue for VAT purposes,” he says.

According to Quercia, while clients largely relinquish control over the IT elements they move to the cloud, the primary advantage of cloud computing relates to its perfect scalability - it is paid for on a purely on-demand basis.

“Because this creates complete transparency of costs, companies might initially be surprised to see what their IT is actually costing but in the longer term, we are convinced that cloud computing will represent considerable savings to clients.”

In the case of data warehousing and business intelligence information, cloud computing is the most logical solution for many organisations because it provides low cost storage and very high computing capacity that will probably only be required on a monthly cycle, he points out.