Australia: Cloud Computing

Last Updated: 25 July 2011
Article by Matthew Glynn and Edward Chatterton

In our IPT Webinar on 1 June 2011, Matthew Glynn and Edward Chatterton took an in-depth look at the advantages and risks associated with cloud computing.

Their discussion examined the legal framework for cloud computing as well as strategies for adopting cloud computing. Here we offer readers a brief overview of the main issues discussed during the Webinar.

Cloud Computing Advantages

Cloud computing, which is generally understood as a model for enabling on-demand network access to an elastic pool of shared computing resources that can be rapidly provisioned and released with minimal service provider interaction, has various advantages and offers exceptional opportunities to a business:

Focus on core business

Running your infrastructure is likely not your primary skill set. Cloud computing allows you to turn that infrastructure over to experts so that you can focus on your core business.

Lower costs, dynamic scalability and flexibility

Cloud computing involves a paradigm shift from Capex to Opex which brings about major cost savings and greater flexibility and availability.

On-demand provisioning/ "Green credentials"

Cloud computing enables you to get more computing power almost immediately which increases your "green credentials" as you are using only what you need.

Stronger software version control

You can update the software simply by changing the software that you are accessing in the cloud.

Reduce software piracy

Everything is much more controlled in the cloud and you can get an uptime guarantee of up to 99.9999 percent in some cases.

Cloud Computing Strategy

Cloud computing strategies are evolving and each organisation has different needs but certain best practices have come together:

  • Find a test case

    Test the waters and do not just jump into this whole hog.

  • Understand the cloud infrastructure and the risks

    Enhance regular auditing and monitoring.

  • Ownership of information is key

    Ensure that you own your information and understand that how your data is going to be handled.

  • Avoid cloud platform proliferation

    Focus on one perhaps two cloud service platforms.

  • Understand the role (and lack of standards)

    Form a committee with cross department collaboration to manage risks and develop short form cloud service provider assessment forms and standard templates of contractual safeguards, data ownership and use limitations.

The Delta is (Potentially ) Enormous , Bridging the Gap

Customers such as banks, retail and telecommunications companies generally have a standard agreement developed to look after their position to reduce risks through a comprehensive set of terms and schedules. Cloud vendors are, however, at the other end of the telescope and the difference between the two is enormous. In Cloud vendor contracts, it is normal that warranties are given by the customers instead of service providers, and that service providers have a right to suspend the service – which is almost unheard of in traditional outsourcing contracts. To bridge the gap, you should analyse the available cloud provider terms in the market and try to derive core themes and standard practices from these. At the other end of the spectrum, you should also analyse your standard terms in order to derive your hub terms, your redline and your key concepts and be prepared to potentially discuss, negotiate, or agree a middle ground with the Cloud service provider.

© DLA Piper

This publication is intended as a general overview and discussion of the subjects dealt with. It is not intended to be, and should not used as, a substitute for taking legal advice in any specific situation. DLA Piper Australia will accept no responsibility for any actions taken or not taken on the basis of this publication.

DLA Piper Australia is part of DLA Piper, a global law firm, operating through various separate and distinct legal entities. For further information, please refer to

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