How to Protect Your Intellectual Property in the Cloud

Around this time last year, the cloud computing contract signings were coming fast and furious -- not just for commodity work like IT management or email, but for software and infrastructure closer to the core of corporate value. Not long after that, the calls started to come in to Greg Bell, principal and the Americas service leader for information protection at KPMG.

Cloud services customers more often line of business leaders that IT executive -- were panicked as they began to realize that their intellectual property (IP) was now at risk. Some, like one client who discovered that he'd potentially exposed his company's precious formulas, had to bring the software and associated processes back in-house -- at no small expense. "They quickly went through an assessment, made very aggressive movement [into cloud computing], and then had to retreat because they were not able to put the proper controls in place," says Bell.

There's always some danger when handing over critical company data to a third party. "Cloud computing entails IP issues similar to traditional IT outsourcing in that you are entrusting sensitive data to a provider who probably won't treat it as carefully as you would," says Jim Slaby, sourcing security research director for outsourcing analyst firm HfS Research. "Your applications will be running on IT infrastructure you do not own or control."