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Computerworld - Liz Devereux knows a thing or two about cloud storage. As director of IT storage and digital imaging at Banner Health, Devereux oversaw the construction of an internal 150TB storage grid. The grid delivers storage as a service to the Phoenix-based health care provider's network of hospitals and health care facilities in seven states, which use it as a repository for radiological images. But she would never entrust that data to an external cloud service provider.

"I'm nervous about someone else controlling my data," Devereux says.

Cloud storage offers some enticing advantages. It's pay as you go, with no capital outlay and no need to buy extra equipment in anticipation of future storage demands. You scale storage dynamically and pay only for what you use. But you must trust your data to the cloud -- and the vendor behind the service.

Few midsize or large businesses are willing to trust the cloud today, although some are experimenting. "There's a huge amount of interest," says Gene Ruth, an analyst at Burton Group. But, he adds, none of his firm's Fortune 100 clients is using a cloud storage service for live data today.

It's probably wise to proceed with caution, says James Damoulakis, chief technology officer at Glasshouse Technologies Inc., an independent IT consulting and services firm that focuses on enterprise data centers, storage and other elements of the IT infrastructure. "Cloud storage today is pretty much an early-stage concept," he says.

Aside from a few heavyweights, like Amazon.com Inc.'s Simple Storage Service (S3) and Verizon Communications Inc.'s Online Backup and Restore service, most offerings come from small start-ups. "It's best suited for low-priority or low-access, low-touch kinds of applications, primarily file-based as opposed to block-based," says Damoulakis, who is a Computerworld columnist. But he says he does have clients that use services from Amazon as temporary expansion space for testbeds or marketing programs.

Joe Mildenhall, CIO at Apollo Group Inc., is taking baby steps into cloud storage. "We have a lot to lose. If we're playing, we're only going to play with the big guys," he says. The Phoenix-based for-profit educational institution is using Amazon's S3 to temporarily store papers that some of its 400,000 college students submit through the Apollo Web site.

But even with Amazon, Mildenhall will entrust only low-risk data to the cloud. For example, students can submit Word documents to the Apollo Web site, which runs the documents through a grammar-checking engine and then parks them in Amazon's S3 storage. When a student retrieves his document, the data is purged. "The major characteristic is that it's not very important storage to us," Mildenhall says.

So far, the integration with S3 has worked well. But Mildenhall is still wary. "If Amazon went down for two days, my opinion would change," he says.