Is $100 Enough Compensation for Your Lost Data?Is $100 Enough Compensation for Your Lost Data?

Small and medium businesses have been moving to cloud computing because it has the potential to ease application development and reduce costs. However, this approach also means that a company is dependent on the service providers ability to keep its systems up and running, something that T-Mobile and Microsoft recently failed to do.Over the weekend, problems arose with T-Mobile Sidekick service as customers personal data, such as contacts, phone numbers, calendaring, and photos, were lost. Servers, which are run by Microsofts Danger cloud service, apparently malfunctioned and did not complete their nightly backup as expected. What the problems were and how they arose is still unclear, but T-Mobile decided to try and compensate customers for the inconvenience. Late Monday, the vendor said said it would offer $100 gift cards to those customers who lost data. One catch is the cards can only be used with T-Mobile services.

The outage is the latest in a growing string of cloud service outages. Google has experienced a few of them and Rackspace, whose business ironically is focused on business continuity, has also had problems keeping its servers online. The news illustrates a few of the downsides that small and medium businesses should take into consideration as they move their IT applications into the cloud.

Outages are common with just about IT systems. When an outage occurs with a companys IT system, it impacts only that organization. With these new cloud based services, the outage affects hundred, thousands, or even hundreds of thousands of individuals. The problem is no one is ever sure when these outages may occur. In the Sidekick case, one might say that the outage occurred at a Good Time, the middle of a long weekend for many companies. However, an outage could also take place during the holiday rush, so businesses have to take that into account when examining cloud services.

The $100 gift card illustrates that many vendors target customers: consumers. While a $100 gift card may lessen their pain, it does not have the same impact on businesses, which often lose $100 in just one minute of downtime. So companies need to be aware that not only may their systems be knocked offline but also that they wont be appropriately compensated for their problem. Cloud computing has some potential benefits, but it also comes with some significant downsides, ones that small and medium businesses need to be aware of.