7 Things You Need to Know About Cloud Computing

The sky truly is the limit, but take precautions to keep your risk down to earth.

1. Where's my stuff? Going to the cloud means storing your electronic files on giant, off-site hard drives or using Web-based applications and accessing them through an online connection -- whether it’s via PC, tablet or mobile phone. That means your files could actually be stored, say, in a giant server farm in Iowa.

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2. You're already up in the air. In a recent survey by the NPD Group, 76% of those who responded had used Web e-mail and tax-preparation and photo-sharing sites, but only 22% were familiar with the term cloud computing.

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3. Clear the clutter. Using the cloud means you will get free storage space and access to a range of serv­ices for personal use. For example, Dropbox, an online storage site, provides 2 gigabytes of free storage, or enough to hold 500 songs in MP3 format; Amazon provides 5GB of free storage. In addition to e-mail, Google lets you create documents, spreadsheets and calendars -- all free. Spotify, an Internet music service, unleashes millions of songs; unlimited use is free for six months.

4. Cut the cord. The ability to access data anywhere and pick up a computing task exactly where you left off will only get easier, says Judith Hurwitz, partner at Hurwitz and Associates and author of Cloud Computing for Dummies. Apple's iCloud already lets you sync your devices simultaneously whenever you update a file so that no matter which Apple device you're using, you have access to the exact same file. Caveat: You may pay a price for this free serv­ice—your privacy. In the user agreements for many serv­ices, including iCloud and Amazon Cloud, is a statement that allows the platform to share your data anonymously. That could mean more targeted ads.

5. Give your business a boost. "Entrepreneurs have access to sophisticated technologies at low costs," says Hurwitz. That means big savings in energy and software costs just by moving from an e-mail program to Web mail and shifting your antivirus protection to cloud software. Signing up with a service such as Box.com lets you manage all your information, no matter where it's located.

6. Hey, you, get off of my… "Make sure your information is encrypted from the start," says Brian McGinley, senior vice-president of data-risk management at Identity Theft 911. It's especially important for financial transactions and documents that contain your Social Security number. Look for "https://" at the beginning of a site's hyperlink; the s means it's secure. Also check the site to make sure the data is encrypted while it's stored. Stick with well-known companies with strong reputations, such as Google or Salesforce. For an additional layer of security, encrypt Word documents and Excel files before you store them in the cloud (click the Microsoft Office button, then click "Prepare" and "Encrypt Document").

7. Back it up. Dropbox had a data breach in 2011 in which 25 million accounts were compromised. Although only a tiny percentage of users were affected, you could be a hacker's next victim. McGinley recommends an external hard drive with encryption. If a thief steals it, the data will be scrambled and unusable without your password.

John Miley
Senior Associate Editor, The Kiplinger Letter

John Miley is a Senior Associate Editor at The Kiplinger Letter. He mainly covers technology, telecom and education, but will jump on other important business topics as needed. In his role, he provides timely forecasts about emerging technologies, business trends and government regulations. He also edits stories for the weekly publication and has written and edited e-mail newsletters.

He joined Kiplinger in August 2010 as a reporter for Kiplinger's Personal Finance magazine, where he wrote stories, fact-checked articles and researched investing data. After two years at the magazine, he moved to the Letter, where he has been for the last decade. He holds a BA from Bates College and a master’s degree in magazine journalism from Northwestern University, where he specialized in business reporting. An avid runner and a former decathlete, he has written about fitness and competed in triathlons.