Can You Trust the Cloud?

Outages at a cloud computing service could hurt your business. The question is whether your in-house systems can do better.

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"A short outage of a mission-critical application could cost millions of dollars," warns John Sloan, an analyst at Info-Tech Research Group, a market analysis firm in London, Ontario.

Who is responsible for picking up the check -- and cleaning up the mess -- is a prickly question for today's host of cloud computing providers, including Amazon, Google, Nirvanix, Salesforce.com, Akamai Technologies, XCalibre Communications and Rackspace Hosting. Part of the difficulty stems from the fact that few cloud providers offer service-level agreements (SLA) promising 99.99% uptime or rebates for excess downtime. And companies that insist on a guarantee of four-9s performance can expect to pay a hefty price.

"In order to guarantee 99.99% service levels, a provider is likely to charge you more," says Sloan, adding that other trade-offs could include having to sign a multiyear contract with a provider.

The Fine Print

Semantics can also come into play when assigning responsibility -- and blame. Google's SLA, for example, reads, "The Google Apps SLA does not apply to... any performance issues: (i) caused by factors outside of Google's reasonable control." Whether poorly communicating servers or denial-of-service attacks qualify as outside of "Google's reasonable control" is a debate for ace legal teams -- a luxury smaller businesses simply can't afford.

When all is said and done, a cloud computing vendor's reputation and track record may be the best indicators of reliability. On the upside, many providers are getting better at keeping their customers informed of service outages. For example, in February Google unveiled its Google Apps Status Dashboard, which provides subscribers with an at-a-glance look at the current availability of applications such as Google Gmail, Video and Docs. Outages are flagged with a red "x," whereas uptime is denoted with a green check mark.

Some vendors are even willing to compensate certain customers for service disruptions. Google, for example, offered Google Apps Premier Edition paying customers a 15-day credit to make up for the service outage that occurred in February 2008. But not everyone receives vendors' largesse in equal measure. In the case of Big Canvas, Nakajima says, Amazon didn't charge the company for its seven hours of downtime -- but that was a discount of less than 1% on its monthly bill.

"Vendors need to promise us 99.9% availability, and if they miss that number, then they should refund us for the whole month," he says.

That's not going to happen anytime soon, according to R 'Ray' Wang, an analyst at Forrester Research Inc. "Most existing cloud contracts don't cover the fact that it's a loss-of-revenue issue for companies," says Wang. "You'll receive credits for future service, but there's really no way to cover your losses."

Not everyone is crying foul over cloud computing providers' refund policies. Just ask Peter Sanchez. He's the founder of SmartJabber.com, a Los Angeles-based start-up that sells automated customer service software such as virtual chat agents to online retailers. Since its launch last April, SmartJabber has relied on Amazon S3 to store image files for chat windows, JavaScript files and Web site images. But last July, a major S3 outage prevented SmartJabber and its customers from accessing those files for more than six hours.

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