In this four-part series, we'll explore cloud computing and whether it's right for your small business
Part Two: Why cloud customers might be worried
A good way to understand the differences between the cloud computing market in Canada and other international markets is to start with what worries potential cloud customers the most about the technology.
According to IBM's Institute for Business Value 2010 Global IT Risk Study, 70 per cent of respondents believe adopting cloud computing makes protecting privacy more difficult. Half the respondents also cited concerns about the potential for a security breach or data loss on the cloud.
That's why cloud computing firms have worked especially hard to try to assuage those fears. Whereas many cloud companies argue that their size and scale allows them to employ much more robust security solutions than the average small or medium-sized business, Canadian cloud companies have also figured out another sales pitch. It goes something like this: store your data on a Canadian cloud, because it's not in the U.S.
Although cloud adoption appears to be much more prevalent south of the border, where the population base makes it easier for large firms to establish more cloud solutions, some cloud company executives say potential customers have been especially concerned about the potential having their data compromised – not by hackers or technical glitches – but by law enforcement.
One of the things that's very different between Canada and the U.S. around cloud computing is the way the information is managed," says says Eran Farajun, executive vice-president of Toronto-based cloud backup firm Asigra. "In the U.S. they have the Patriot Act. "The American government has the right to go in to any data in U.S. and look at it."
As such, the combination of Canada's brand as a country and its less intrusive rules on access to data has drawn some customers in the U.S. to look at Canadian cloud computing solutions, Mr. Farajun said.
However, in some industries, jurisdiction still matters. In effect, there are legal reasons to make sure the data centres where a company's data is stored are in certain physical locations. On that front, Canada's relatively small population puts the country somewhat at a disadvantage. Some of the biggest cloud computing companies in the world have yet to set up servers in the country.
However Mr. Farajun argues Canada's population actually makes it a prime market for cloud computing solutions. Because the country's population density is so low, spread out over such a large land mass, he says adopting a technology that can be accessed from anywhere and doesn't need to be in the same location as its user makes a lot of sense.
"[Cloud computing] doesn't have to be just a local service," he says. "Viability is not tied to local population."
Increasingly, Canadian cloud companies are turning their attention to attracting small and medium-sized businesses, which in many ways represent the sweet spot of the industry. Many such firms have a need to establish a greater Web presence through upgraded technology such as servers or Web-based solutions (a recent Intel Canada study found that 90 per cent of companies with employing less than 100 people do at least some of their business through the Web). But many small companies don't have the resources to buy, administer and continually upgrade the hardware and software necessary for such expansion.
But with giants such as Amazon, Microsoft and Google all vying for the traditional cloud market, Canadian firms have largely found their niche in very specific areas of the industry.
In August of last year, research firm IDC posted its list of 10 Canadian cloud companies to watch. Asigra, which specialized in cloud-based backup, was on the list. As was Freshbooks, which offers cloud-based invoicing and billing solutions. Another highlighted company, BoardSuite, specializes in on-demand corporate governance software.
The number of highly-focused Canadian cloud companies illustrates an important element of the industry: small and medium-sized businesses looking for a cloud solution don't have to migrate their entire IT department, but instead can pick and choose what services they want to outsource.
"You don't have to buy some all-encompassing solution," says Mr. Farajun. "You can purchase a cloud service for $200 a month to do just one thing."
For more series, go to the Web Strategy section of Your Business.