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Cloud compliance: Will PCI be applied to cloud computing by the FTC?

The hype around cloud computing may have subsided, but the issues around adapting and adopting the underlying model are as hot as ever. The enterprise IT headline of the week in The Wall Street Journal was, after all, that IBM is in talks to buy Sun Microsystems. Why? GigaOm thinks IBM wants to bolster its cloud computing arsenal

Major questions for enterprise adoption remain, however, particularly around the issues of security and compliance. When I attended “An Evening in the Clouds” at last year’s Enterprise 2.0 Conference, where, Google and offered complete cloud computing environments, these paired challenges were cited by a California state CIO as major barriers to governmental adoption. The advantages posed by accessing the computing power and storage capacity offered in the cloud have simply not outweighed the risks posed by exposing sensitive data by moving it outside of encrypted internal networks.

The issue of compliance and cloud computing is of critical importance for organizations large and small, public or private, nonprofit or for-profit. As Lamont Wood notes in his excellent article for Computerworld on cloud compliance, “the user organization is responsible for figuring out who is doing what to its data and requiring assurances about the data staying in compliance.”

As Wood writes, there are specific issues raised by the usual suspects: SAS 70, Payment Card Industry Data Security Standards (PCI DSS) and the Health Insurance Portability and Accountability Act. For instance, Chris Day, senior VP at Terremark Worldwide Inc., noted in the article:

“PCI responsibilities of a cloud provider include firewalls, intrusion detection, disaster recovery, physical controls and appropriate segmentation of staff duties. Servers handling PCI data should be in a separate room with solid walls and a monitored door, rather than being placed in the main floor of the data center with the other servers.”

Moving personally identifiable information (PII) that an organization has assumed responsibility for protecting to a third party also requires a degree of trust that many governmental entities have been understandably hesitant to make. Or, in some cases, will never make. As Scott McClellan, VP and chief technologist of scalable computing at HP, said to Stacy Higgenbotham during an interview for GigaOm: “Solving security is a trust issue that can be surmounted, but the legal issues around location cannot be. There are also items, such as corporate data for financial results during a quiet period, that aren’t going to leave the enterprise walls.” CIOs, CTOs and CCOs tasked with SOX compliance will likely find that reality familiar.

In the wake of comments by Vivek Kundra, the new U.S. CIO, federal adoption of cloud computing and Software as a Service (SaaS) is likely about to increase. Consider what David Linthicum writes at the Intelligent Enterprise: “It’s clear that new White House appointee Vivek Kundra is part of a ‘new generation of CIOs’ that consider cloud computing as a viable architectural option.” Just read what Kundra told The Wall Street Journal last year:

“I’m all about the cloud computing notion. … I look at my lifestyle, and I want access to information wherever I am. … I am killing projects that don’t investigate Software as a Service first.”

The nation’s first CIO is going to face some stiff criticism in both private and public enterprises. I’m not worried about Kundra’s ability to weather such critiques — he handled the federal sting on his D.C. offices with grace, after all — but there are valid questions about whether certain data sets and institutions should ever be integrated into a cloud computing model.

Perhaps prompted by Kundra’s evangelism, Google’s lobbying or pervasive cloud security concerns, the FTC met this past week to discuss securing personal data in the global economy. The discussion was timely. (Although, as of today, there was no webcast posted for the session.)

As reported by Computerworld UK, Google is getting slammed for the security of its cloud services. According to Jeremy Kirk, “the Electronic Privacy Information Centre is calling on the U.S. Federal Trade Commission to investigate whether Google is making deceptive claims over the security of data stored in cloud-computing services such as Gmail and Google Docs.”

That’s precisely the issue that Chuck Goolsbee focused on when he shared his considerable skepticism about whether cloud computing providers can meet regulatory compliance requirements like PCI DSS in “Don’t buy cloud computing hype: Business model will evaporate.” If there isn’t an effective regulatory standard, framework and guidance from the appropriate regulatory bodies on security, compliance issues will derail enterprise adoption.

FTC guidance on cloud compliance or official recognition by the PCI Security Standards Council may be forthcoming later this year. Given the visibility, adoption and interest in cloud computing in the enterprise, cloud compliance under PCI or something like it seems likely. Michael Dahn addressed the issue late last year inCloud computing security and PCI,” relating the controversy to earlier discussions around compliance and virtualization. He reiterates a common mantra I’ve heard this month: “Regulatory compliance and PCI are NOT technology issues, but risk management issues.”

One potential way that enterprises can adopt cloud computing and still remain compliant may be to use multiple clouds: an external cloud and an internal cloud or private cloud. In fact, at least one Gartner analyst thinks private cloud networks are the future of corporate IT. As Higgenbotham reported in her excellent article on the cloud and the enterprise at GigaOm:

“HP and companies such as Elastra, Sun Microsystems and IBM are pitching highly virtualized and automated environments that mimic the agility of the public clouds. However, all of the people at enterprise-oriented companies I’ve spoken with believe that their customers should start turning over some computing tasks to external clouds, be they infrastructure providers like those offered by Amazon, Rackspace’s new CloudServers business, Sun’s planned cloud or platforms such as Microsoft’s Azure.

Many believe enterprise customers will source their computing to multiple clouds, both to avoid vendor lock-in and because some clouds will be optimized for certain types of computing tasks. That’s why tools to manage multiple clouds will be important. RightScale, Aptana, Sun and others are all trying to help manage multiple clouds.

And once an enterprise sends out data to external clouds, they will need to find ways to manage, secure and  actually deliver this data from inside the corporation to a cloud. Some providers, like Rackspace and Voxel, are banking on customers using their hosting and cloud products as a way to keep the data inside the same company (and maybe data center). [Werner Vogels, CTO of Amazong’s Web Services] says Amazon uses VPNs with enterprise clients, while startups such as Aspera are creating private highways to deliver data between clouds.”

In a throwback to a classic IT conundrum, this paradigm of multiple clouds and multiple cloud providers is complicated by interoperability issues. As Rich Miller writes at Data Center Knowledge, cloud interoperability is a hot topic at the moment as a result of the posed multiple cloud model and the diversity of infrastructure and standards presented by Google, Amazon, Microsoft and other cloud computing providers. As Craig Balding of Cloud Security told Wall Street & Technology, “Amazon and Google are walled gardens. You can’t take an app from Google and bring it over to Amazon because they’re architected differently.”

In the cited article, “Adoption of Cloud Computing Hindered by Security and Operations Concerns,” Penny Crossmon reported significant compliance issues rest in the ability of cloud computing providers to meet audit requirements. As she writes, “the biggest hurdle for cloud computing on Wall Street right now — especially among large firms — is a lack of visibility into cloud providers’ operations and security.” Balding suggested that nondisclosure agreements may provide a means for cloud computing providers to share more detailed information about where data is being handled, how, by whom and how it is being protected — all crucial under many compliance regulations. Amazon Web Services released a cloud security white paper to try to address the visibility issue but leaves key details like access to log files or access for digital forensic investigations related to e-discovery unanswered.

One project to keep an eye on is Eucalyptus, an open source system that enables organizations to create private clouds that will be interoperable with multiple cloud computing platforms. As Simon Wardley recently blogged on Radar O’Reilly, “Karmic Koalas love Eucalyptus.” This cryptic title refers to the fact that Mark Shuttleworth recently announced that the next release of Ubuntu 9.10 is code-named Karmic Koala. The project won’t address the thorny issues of compliance requirements but, given the ambition of Canonical (the company that sponsors and supports Ubuntu) to “provide our users with the ability to build their own clouds whilst promoting standards for the cloud computing space,” it may drive the industry towards the adoption of PCI or other frameworks.

For more commentary and perspectives on compliance in the cloud, review the following articles and blog posts:

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