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The Conventional View: Cloud computing offers companies sizable potential advantages, chief among them being lower costs and greater flexibility. But the risks of “the cloud,” including the potential compromise of sensitive business data, are very real and, for some companies, should be a legitimate deal breaker.

My View: Undoubtedly there are some risks to trusting parts of one’s business to the cloud. Data privacy, for one, is not necessarily ensured, as a number of governments (including the U.S.) have sought or are seeking the legal right to access the data of companies that operate in their territories. And governments’ reach is likely to expand. There is also, for example, the possibility of business disruption if a company’s chosen provider has operational problems. A number of businesses learned this the hard way last April, when Amazon, the cloud industry’s dominant player, suffered a major outage.

On balance, though, the cloud is a relatively safe, smart bet for most businesses. In particular, most companies’ biggest fear—the loss or breach of critical proprietary data—is exaggerated. In fact, data stored in the cloud are often more secure than data stored in-house and accessed via a company’s standard networks and desktop computers. Cloud providers, which are well aware that security is a make-or-break issue for them, continue to focus on the problem and have made great strides toward hardening their infrastructures. In addition, the distributed nature of cloud computing—that is, the fact that data are stored in multiple places—arguably makes data less vulnerable than if stored centrally in-house. Finally, having data stored externally removes the threat of an in-house security breach resulting from equipment theft.

The threat of a business disruption in the event of an Amazon-like failure is real. But the danger can be mitigated considerably by proper planning—for example, arranging to have data automatically duplicated to a second site or contracting with a second provider. Bottom line, moving data to the cloud represents far less of a risk than many people think—and, for most companies, would actually result in greater security.

-- Ralf Dreischmeier, senior partner and managing director and leader of BCG’s European IT practice, Boston Consulting Group