What is Cloud Computing? Up to speed July

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(1)What is Cloud Computing? Up to speed | July 2011 www.allenovery.com.

(2) 2. Up to speed | What is Cloud Computing? | July 2011. What is Cloud Computing? “Confusion abounds when cloud computing is discussed, and the situation is getting worse, not better” (Gartner). Some say that lawyers are mainly looking for problems – not solutions. So what does Allen & Overy have to add to the discussions? We see cloud computing as an integral element of today’s technology use and believe that the risks of using the cloud are often exaggerated and can, in most cases, be prevented or addressed. /

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(25) to be considered in this context.. Why the hype?. What is it?. Cloud computing has been around for many years, but has re-emerged in the last few years as a “hot” topic generating an increasing amount of media coverage. The hype has primarily to do with cloud’s prevalence in all aspects of consumer and business life and how this reliance on third party resources shapes our consumer and business interactions.. Put simply, a cloud is a huge collection of hardware and

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(51) their own systems that can handle a peak load (but which is

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(55) otherwise fully used), everyone shares these resources and systems in the cloud. There is no need to buy the systems (ie hardware and software) individually – you can just use it “as a service” on an as-needed basis.. On a consumer level, the majority of people have used some

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(60) realising it. Publically available email accounts (such as Hotmail, Gmail and Yahoo!), consumer sites (such as eBay and Amazon), search engines and content sites (such as Google and YouTube) and social networking sites (such as Facebook and Twitter) are all good examples of applications available via the cloud. Most recently, Apple’s launch of the iCloud has shown the media frenzy which follows new products in this space, even though it is unlikely to be available outside of the U.S. this year. At a business and enterprise level, companies have

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(82) next generation of enterprise-wide computing solutions at prices not otherwise achievable. This is particularly attractive at a time of greater focus on costs.. © Allen & Overy LLP 2011. Despite certain challenges that large entities face when moving to a cloud model, enterprise adoption of cloud services is predicted to continue to expand. Forrester Research has predicted the market will grow from USD40.7bn in 2011 to USD241bn in 2020. The European Digital Agenda Commissioner, Neelie Kroes, believes that cloud computing is critical to Europe’s growth and wants to see a clear legal framework in place, the adoption of an international standardisation of data formats and an increase in the size of the market. The next challenge is how to achieve these goals. The European Commission has recently opened a public consultation on cloud computing. Opinions from individuals,

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(91) 3. Types and terminology explained Cloud service providers are growing in sophistication and

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(104) generation cloud computing services which enable selfprovisioning through web interfaces.

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(111) % – Software as a service (SaaS) – Under this model, you access software remotely via the cloud (eg through a web browser). This eliminates the need to directly install the software and

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(115) on a subscription or pay-as-you-go basis. Gmail, Facebook and some Oracle products are examples of SaaS. – Infrastructure as a service8693: 6 install and operate your own servers, operating software,

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(121) /; webservices and Rightscale. – Platform as a service (PaaS) – PaaS is essentially a product for

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(128) virtual environments which enable you to directly integrate your software and deploy your applications (eg to other third parties) without having to invest in and manage the underlying hardware and infrastructure. Examples are Microsoft Azure and Google Apps engine.

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(133) %. – Sophisticated organisations are increasingly using “hybrid clouds”, which involve a mixture of public cloud and private cloud services. These enable users to take advantage of cheap unit prices of public clouds, while ensuring that mission-critical services are not exposed to the risks often associated with such public cloud services. Under a hybrid cloud approach, organisations can choose the method of

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(138) applications or data. The parties to a cloud arrangement are typically an end user or customer who contracts directly with a service provider which provides the cloud services. The service provider may in turn have a number of subcontractors located around the world. There is generally no direct contract between the end user and the subcontractors. This may result in a complex web of parties and the customer is unlikely to be aware of the identity or location of the subcontractors unless they are able to obtain this information during negotiations. However, lack of visibility and control with respect to subcontracts may not be an issue, depending on the nature of the cloud services being procured and whether the data or applications are sensitive or

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(145) how the infrastructure is built, as long as it delivers and is safe.. – Commercially available cloud services are referred to as “public clouds” because they are typically available to anyone. The public cloud provides shared infrastructure based on a >

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(151) lower cost, the services available through a public cloud are

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(156) security and/or stringent service levels. – “Private clouds” are dedicated to one or more users and are not accessible by others unless the owners authorise such use. Resources are pooled and can be either externally or internally hosted. Only very few organisations, such as large banks and multinationals, have enough scale to make it worthwhile to invest in a private cloud. Private clouds are

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(160) 5# – Other organisations have the potential to establish “community clouds”, which involve a particular industry 8

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(165) identifying areas where services or applications can be “white labelled” and shared.. www.allenovery.com.

(166) 4. Up to speed | What is Cloud Computing? | July 2011. :

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(170) \ – Cost3

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(174) #X since it is on-demand and scalable, you will in aggregate buy less capacity for the same processing volumes than with traditional models. For example, you don’t buy your own servers based on peak load (which means that a substantial part of the capacity is not used most of the time) but you buy the peak load as a service only when you need it. Secondly, the user will have lower maintenance, support and testing costs, since most maintenance and support will be done by the service

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(181) enabling the cloud provider to provide services at a cheaper unit price to customers. For some services, cloud services are sold with a “utility based pricing” model.

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(184) (just like electricity and other utilities). However, customers should be cautious as to whether it is a true >

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(189) > what you order” (and therefore you still pay for what you ordered but did not use). While this may still be

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(194) #. © Allen & Overy LLP 2011. – Anytime, anywhere access with expected service levels approaching 100% (with 99.999% being common). – Reduced service provider interaction with an emphasis on customer self service where enabled by the underlying technology. – Speed3

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(210) $ 5# – Flexibility and “elasticity” – fully scaleable solutions (depending on the customer’s intended use for the service and whether underlying applications enable full scalability) that can be used “on demand”. – Reduced pressure on internal systems and the potential to

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(217) what stage you are currently at in your technology lifecycle and whether you are already fully virtualised). – Potentially better security systems and back-up than can be procured in a self-sourced model, with an opportunity to take advantage of carrier grade security and back-up systems which are directly integrated into the platform..

(218) 5. What industry standards and guidance do we have? At this stage, despite the various cloud industry groups which have been established, settled standards have not yet

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(236) 9# However, assuming that industry standardisation may give comfort to new cloud customers looking to make a switch to a cloud solution, the numerous standards bodies, consortia and other interest groups are looking at issues

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(241) and cloud interoperability. As mentioned above, the EU has also shown enthusiasm for harmonising standards and has just opened its promised public consultation on cloud computing. While there is no clear leader in the development of cloud computing standards (and it is not clear how useful this will prove to be), the following organisations are some of

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(244) % – The Cloud Security Alliance wishing to promote the use of best practices for providing security assurance within cloud computing,

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(261) Knowledge (CCSK) and has also published Security Guidance. Most recently the CSA has announced it will collaborate with the International Organization for Standardization/International Electrotechnical Commission 86]^'*9

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(266) privacy standards – potentially putting it at the forefront of the bodies looking at cloud standards. Already, some providers have been turning to existing standards set by

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(268) Services for example, announced in November 2010 that

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(277) standards around management and control. %^^

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(279) #^. – TM Forum Cloud Service Initiative is an initiative which aims to bring together cloud users, technology suppliers and cloud service providers to better understand user needs and remove barriers to growth and success. The program helps the industry to overcome barriers to adoption and aims to assist in the growth of a vibrant commercial marketplace for cloud-based services. %^^# tmforum.org/EnablingCloudServices/ ProgramOverview/8008/Home.html – CloudAudit8

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(282) CSA. CloudAudit aims to provide a common interface and namespace that allows cloud computing providers to automate the Audit, Assertion, Assessment, and Assurance of their infrastructure, platform, and application environments and allow authorised consumers of their services to do likewise via an open, secure interface and methodology. %^^# cloudaudit.org/ – ENISA8

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(285) 5 Security Agency) produced a cloud security risk assessment which is widely referred to across EU

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(290) '<#'6/ published an assurance framework for governing information security risks. This assurance framework is being used as the basis for some industry initiatives on cloud assurance (such as Eurocloud and CAMM). <

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(293) components of CSA’s CCSK. %^^#

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(296) – The ITU, the United Nations agency for information and communication technology issues, which has tasked its cloud focus group with progressing standardisation in cloud computing.%^^# # ^

(297) ^<^ focusgroups/cloud/Pages/default.aspx. www.allenovery.com.

(298) ~. Up to speed | What is Cloud Computing? | July 2011. Conclusion Cloud computing is here to stay and is evolving at a fast rate. 6

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(329) placed to accommodate both desires. While it may not be suitable in every scenario, it is clear that it will continue to gain momentum and it is likely that industry consolidation and convergence, and the increased focus on this area by bodies such as the European Union, will result in the ^

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(331) #. Use of cloud services does have its challenges. The relatively

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(336) concern over security, the location, transfer and handling of personal data and the protection of trade secrets. These and other concerns, such as the ease of transition between cloud service providers and issues related to intellectual property rights management and choice of law will be considered in /

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(365) technology and that the challenges can generally be dealt with relatively easily.. This note is for general guidance only and.

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(370) # © Allen & Overy LLP 2011.

(371) 7. Your Allen & Overy contacts HERALD JONGEN. FILIP VAN ELSEN. JIM FORD. Partner – Corporate Netherlands – Amsterdam. Partner – Corporate, Intellectual Property Belgium – Antwerp. Partner – Corporate London Tel +44 (0)20 3088 4797 [email protected].

(372) {_q~`{~{ [email protected]. Tel +32 3 287 73 27 #

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(376) #. PAUL KELLER. CATHERINE MANLEY. CHARLOTTE MULLARKEY. Partner – Litigation USA – New York

(377) {_{_~{q~{ [email protected]. Associate – Corporate, Intellectual Property Germany – Frankfurt

(378) ~_~~~q [email protected]. Senior PSL – Corporate London Tel +44 (0)20 3088 2404 [email protected]. TOM DE CORDIER. WILL MCAULIFFE. CONNELL O’NEILL. Counsel – Corporate, Intellectual Property Belgium – Brussels. Partner – Corporate Hong Kong Tel +852 2974 7119 #

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(381) #. Senior Lawyer – Corporate Australia – Sydney

(382) ~{_```q [email protected]. Tel +32 2 780 25 78 [email protected]. www.allenovery.com.

(383) FOR MORE INFORMATION, PLEASE CONTACT:. London. Allen & Overy LLP ]

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(385) London '{~/ United Kingdom Tel +44 (0)20 3088 0000 Fax +44 (0)20 3088 0088. GLOBAL PRESENCE. Allen & Overy is an international legal practice with approximately 4,750 staff, including some 480 partners, working in 39 offices worldwide. Allen & Overy LLP or an affiliated undertaking has an office in each of: Abu Dhabi Amsterdam Antwerp Athens (representative office) Bangkok Beijing Belfast Bratislava Brussels Bucharest (associated office) Budapest Casablanca Doha. Dubai Düsseldorf Frankfurt Hamburg Hong Kong Jakarta (associated office) London Luxembourg Madrid Mannheim Milan Moscow Munich. New York Paris Perth Prague Riyadh (associated office) Rome São Paulo Shanghai Singapore Sydney Tokyo Warsaw Washington, D.C.. Allen & Overy means Allen & Overy LLP and/or its affiliated undertakings. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in one of Allen & Overy LLP’s affiliated undertakings. © Allen & Overy LLP 2011 I CS1106058. www.allenovery.com.

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