Précis

The Economist Intelligence Unit (EIU) has issued a report stating whilst the impact of cloud on the technology world has been huge so far, this is only really the beginning for the cloud. 

What?

In a report issued last month EIU concluded that cloud technology could be as disruptive to businesses as the advent of computing itself. EIU consulted with six experts from a range of IT related roles. Cloud – broadly speaking the use of remote servers to store, process and manage data rather than using local servers and hard-drives - appeared way back in 1999 in its most basic form. It has since progressed to the extent that it can turn IT resources into tradable goods, much to the advantage of both the providers of the software and those who use it.

However, EIU’s report also raised several concerns relating to the growing use of cloud technology. For example, due to the lack of established cloud standards, the change from private software within a business to public software for consumers is inhibited due to incompatibilities. Each cloud service has its own software so there is no easy level of interoperability between them.

Pricing was also cited as an issue in that the cloud pricing model still seems to favour the providers of the software rather than the consumers. Many providers still charge their rates based on the bulk amount of space purchased, rather than the space actually used on the software. Actually, at Eversheds, in terms of the cloud deals we are working on, we don't believe that to always be the case and that, if the right solution is achieved, it can really be a "win, win" for both sides. 

So what?

Though there are some problems with the current cloud model, the cloud does have enormous benefits. Cloud reduces the need for a business to purchase and run hardware, reducing a business’ upfront costs and in the long run the business' own carbon footprint. The accessibility of cloud for individual users is changing the way businesses are run with the division between IT and business becoming far less evident. Cloud also allows even the smallest of businesses to compete with the largest of businesses in being able to access the same cloud services.

As more businesses turn to using the cloud increased demand will inevitably drive improvements and efficiencies. Compatibility will be a key area for development both to enable companies to conduct business with each other entirely over the cloud and for consumers to be able to easily share data with friends and family. As the cloud grows in popularity in the consumer world providers will inevitably need to up their game on pricing in order to effectively compete.

At Eversheds, our IT lawyers have been working on cloud deals, both on the supplier side and the consumer side for years and we have seen a significant uplift in adoption of cloud in the last 18 months. It will be very interesting to see how disruptive the technology is for traditional computing. It is certain, in our view, to take huge trenches of the traditional IT market going forwards.