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A recent CIO.com survey found 46 percent of IT decision makers are giving cloud storage a look. It's particularly appealing for data backups, according to Charles King, an analyst with Pund-IT. Storing data in the cloud, or DaaS, is cheaper than building a second data centre. Backup storage could pave the way for companies using cloud vendors as collocation providers for any IT service or application, including CRM, ERP and data storage, says King.

Why The Hype

Companies that provide managed services for applications—such as Amazon and 3Tera—are looking for ways to increase revenue and use their facilities for more than hosted apps and secondary services, such as holding CRM data. So the marketing buzz is at full tilt, with seemingly every cloud services provider looking to add storage to its portfolio of offerings.

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Although King advocates cloud storage, he says it's not right for every type of data. Certain kinds of data will probably never make it to the cloud, King believes, including financial information and sensitive government documents.

That's because privacy regulations and data centre security breaches make IT managers squeamish. Given the hard-to-pin-down nature of the cloud, where you aren't sure where the data is stored, cloud storage in the enterprise can be a tough sell. Companies like to know where their data is and that it's encrypted during every single transmission—despite the guarantees of cloud providers who insist that security is tight.

Wayne Sadin, the CIO at armored-vehicle company Loomis, uses Mozy Enterprise for mobile workers who need cloud-based data backup for laptops, no matter where they go. "We have dipped our toes in the cloud [with Mozy]," he says. Loomis also uses Oracle On-Demand cloud services for CRM, accessed over the Web.

He says that if cloud vendors figure out how to manage physical restrictions on latency and bandwidth, he would be interested in cloud storage. Sadin says he doesn't need extra storage capacity right now, but that's not the main reason he's holding off. He isn't satisfied with the speed of access to data stored in the cloud.

Should You Invest?

Eventually. As Dan Kang, the CIO at security virtualisation vendor Pimotec notes, cloud storage isn't proven yet. There are no common standards or APIs for connecting one cloud provider to another, making compatibility among cloud vendors less compelling for those who might want to share data between vendors.

There's also a long way to go before there is a single sign-on capability for all web storage, although standards such as OAuth (to enable secure data access) are helping. Sadin says cloud vendors will figure security out—just as the IT industry figured out network storage arrays, shared mainframe access and resolved other once-unattainable complexities.