The Bank of England's CIO has advised businesses to be aware that partnering with US-based cloud suppliers could result in confidential data being accessed by government agencies such as the FBI and CIA.
Speaking at Cloud World Forum, CIO John Finch said that firms should consider data sovereignty rules along with security and costs when beginning a public cloud strategy.
"Where is the company provisioning for you domiciled? Because even if that well-known cloud provider says 'don't worry, it won't leave Europe', if they are an American company, it is likely that your data and processing is now subject to the American Patriot Act. And, if it is integrated to your infrastructure, it is likely that all of your services are subject to the Patriot Act," he told delegates.
"So if the CIA or FBI want the data, they have got it. I am not saying it is necessarily a bad thing, but you need to think through very clearly what you are giving and when you are giving it."
He added that the customers must have a firm grasp of the domestic regulations in the country where data will be stored, and not be swayed by the claims of vendors.
"One of the very well-known cloud providers in Europe will say 'don't worry, your data will never leave Europe, those boxes are in the Nordic countries'. But how many people understand the rights of Nordic countries' governments to third-party data hosted on their servers?" he challenged.
Another major concern should be cyber security, which has increasingly been a high priority for the Bank of England itself, Finch said. While moving services to the cloud may actually have benefits for some companies, it means passing control onto a third party.
"The big elephant in the room is cyber security. You can imagine we are quite worried about it," he said.
"When you go to a third party supplier with those types of services, you are now placing some of your security posture in their hands. That could be a good thing, as they may be able to improve your security. But you are betting part of your perimeter, so understand what that means."
BoE's private cloud
The Bank of England itself relies on "highly virtualised" infrastructure to support its mission critical systems which have to be available 24/7 to support the UK's finance sector. Itspent £1.1 million on an EMC storage area network (SAN) in 2011, and has considered a substantial virtual desktop deployment.
However, there are "no plans at the moment" for the Bank of England to move services to a public cloud, though Finch did not rule it out.
"I would encourage people to take existing services and virtualise. So we run our own internal cloud-type model, with highly virtualised storage arrays. This allows us to manage load and fail over, with hot redundancy between different sites."
Despite his warnings, Finch said that he does see the potential of the public cloud.
"I may sound like a bit of a bit of a 'cloud denier'. I am not. I think can deliver really great value for many use cases where this kind of capability can be a great enabler," he said.
"Think about selling a new product to a new market. You no longer need to set up an office, someone can just go in with an iPad as long as they are connected to the cloud. You have got your CRM, your customers lists. This all-of-the-time connectivity can absolutely help."
Nevertheless, customers should not be swayed by claims that cloud will lead to cost savings. The main benefits are from a business transformation perspective.
"The vendors out there will tell you there is financial upside to all of this - you can change from capex to opex. My answer to that is: do not let how the bean counters count their beans determine critical IT strategy. Work out the best thing to do and then talk to the accountant," Finch said