Many Corporate IT and legal departments are afflicted with a new condition: clouditis. Clouditis is an irrational exuberance with all technologies related to cloud computing. There's quite a bit of clouditis going around, and legal and IT groups need to be careful that it does not drive bad business decisions.

Cloud computing, one of the few corporate IT trends to earn “cool” status in many years, has been getting significant attention lately. At its simplest level, cloud computing refers to having your data or applications hosted outside your data center (that nebulous someplace else is the “cloud”). These data and applications are then accessed via the internet. Proponents of cloud computing argue that this model provides better service levels, scalability, lower costs and better sharing of information. Cloud computing typically trades lower up-front capital expenditures for larger, ongoing operational expenses. Many newer legal applications from e-mail archiving to litigation management systems are cloud based. And if you have not already noticed, a lot of IT folks are gaga over cloud computing.

Cloud computing is actually a throwback. Starting in the 1960s many organizations accessed their computer applications from shared, remotely managed computer systems in a model called time-sharing. In the 1970s most companies moved to purchasing their own large “mainframe” computers and housing these systems within their own data centers. In the late 1980s these mainframes began to give way to a more distributed computing model called client server, where applications ran both on servers and desktops. Then at the beginning of this century companies started moving away from client server to hosting applications on large, centralized servers accessed with light weight (or thin) clients, typically browsers. Now in the latest technology wave is to move these large servers out of the data center into the cloud, in a model somewhat similar to time-sharing. The future is moving back to the past.

We have helped a number of organizations evaluate technology products for the legal department. Often these evaluations include cloud or cloud-oriented products. Often the first concern raised over cloud computing is data security. While security does need to be addressed, it often gets trumped by a bigger consideration, product maturity. Most on-premise litigation management and archiving tools are second or third generation products, whereas nearly all cloud-based tools are first generation, often with more limited functionality. While the cloud products will evolve in functionality over the next three years, companies need to ask themselves if this limited functionality will suffice in the near term. The other important area to validate is total cost of ownership for all users over say, a three-year period.

What have we found in our product evaluations? Sometimes total cost of ownership of a cloud-based e-mail archiving product, for example, is cheaper. Sometimes it is not. Sometimes cloud-based litigation management systems provide the right level of functionality, sometimes not. Sometimes cloud products are easier to deploy and manage, and other times not. We see tremendous variance.

In own company, Contoural, for example, some of our internal corporate applications are cloud-based. In other areas where we need strict segregation of customer information we avoid the cloud. We take it on an application-by-application basis.

Adopting cloud computing because it brings better business benefits is good. Adopting cloud computing just because it is cloud computing – without understanding whether it brings real business benefit – is not necessarily good. When and if any legal-oriented technologies – including cloud based offerings – are the right choice depends on a number of factors, including size, complexity, litigation profile, compliance requirements, employee culture, etc. The lesson here is that legal departments need to speak up and take an active role in the selection of legal-oriented technology. These decisions need to be driven by business needs and benefits. Legal and IT should articulate their business and functional requirements, and then match these against the proposed products. Keep your decisions well-grounded, and don't let technology euphoria get you lost in the clouds.

Read Mark Diamond's previous column. Read Mark Diamond's next column.

Many Corporate IT and legal departments are afflicted with a new condition: clouditis. Clouditis is an irrational exuberance with all technologies related to cloud computing. There's quite a bit of clouditis going around, and legal and IT groups need to be careful that it does not drive bad business decisions.

Cloud computing, one of the few corporate IT trends to earn “cool” status in many years, has been getting significant attention lately. At its simplest level, cloud computing refers to having your data or applications hosted outside your data center (that nebulous someplace else is the “cloud”). These data and applications are then accessed via the internet. Proponents of cloud computing argue that this model provides better service levels, scalability, lower costs and better sharing of information. Cloud computing typically trades lower up-front capital expenditures for larger, ongoing operational expenses. Many newer legal applications from e-mail archiving to litigation management systems are cloud based. And if you have not already noticed, a lot of IT folks are gaga over cloud computing.

Cloud computing is actually a throwback. Starting in the 1960s many organizations accessed their computer applications from shared, remotely managed computer systems in a model called time-sharing. In the 1970s most companies moved to purchasing their own large “mainframe” computers and housing these systems within their own data centers. In the late 1980s these mainframes began to give way to a more distributed computing model called client server, where applications ran both on servers and desktops. Then at the beginning of this century companies started moving away from client server to hosting applications on large, centralized servers accessed with light weight (or thin) clients, typically browsers. Now in the latest technology wave is to move these large servers out of the data center into the cloud, in a model somewhat similar to time-sharing. The future is moving back to the past.

We have helped a number of organizations evaluate technology products for the legal department. Often these evaluations include cloud or cloud-oriented products. Often the first concern raised over cloud computing is data security. While security does need to be addressed, it often gets trumped by a bigger consideration, product maturity. Most on-premise litigation management and archiving tools are second or third generation products, whereas nearly all cloud-based tools are first generation, often with more limited functionality. While the cloud products will evolve in functionality over the next three years, companies need to ask themselves if this limited functionality will suffice in the near term. The other important area to validate is total cost of ownership for all users over say, a three-year period.

What have we found in our product evaluations? Sometimes total cost of ownership of a cloud-based e-mail archiving product, for example, is cheaper. Sometimes it is not. Sometimes cloud-based litigation management systems provide the right level of functionality, sometimes not. Sometimes cloud products are easier to deploy and manage, and other times not. We see tremendous variance.

In own company, Contoural, for example, some of our internal corporate applications are cloud-based. In other areas where we need strict segregation of customer information we avoid the cloud. We take it on an application-by-application basis.

Adopting cloud computing because it brings better business benefits is good. Adopting cloud computing just because it is cloud computing – without understanding whether it brings real business benefit – is not necessarily good. When and if any legal-oriented technologies – including cloud based offerings – are the right choice depends on a number of factors, including size, complexity, litigation profile, compliance requirements, employee culture, etc. The lesson here is that legal departments need to speak up and take an active role in the selection of legal-oriented technology. These decisions need to be driven by business needs and benefits. Legal and IT should articulate their business and functional requirements, and then match these against the proposed products. Keep your decisions well-grounded, and don't let technology euphoria get you lost in the clouds.

Read Mark Diamond's previous column. Read Mark Diamond's next column.