The following is an excerpt from Cloud Computing for Lawyers, Chapter 2, “Why Cloud Computing is the Future.”

Before cloud computing, law firms had to purchase and maintain their own servers. Some small businesses owned just a few servers located in an office closet, while larger companies housed hundreds of servers at an off-site location that they either owned or leased. Under this service-based model, regardless of the number of servers, an IT staff is required to maintain the servers and update the software. Sometimes the staff is in-house, and sometimes it is outsourced on an as-needed basis. Either way, it is an added expense that only increases as the business grows and more servers are purchased. More servers require more maintenance, and more maintenance means more staff and more costs.

Another way that the current system of client-server computing results in increased expenses is its inherent inefficiency. When a law firm owns servers, the servers must be configured to accommodate a hypothetical peak capacity. This ensures that, should that peak capacity ever occur, the servers are able to handle the increased demand even if it is just once per year under the most unusual of circumstances. This necessary configuration is highly inefficient, as explained by Carr in The Big Switch:

The proliferation of single-purpose systems has resulted in extraordinar- ily low levels of capacity utilization. One recent study of six corporate data centers revealed that most of their 1,000 servers were using less than a quarter of their available processing power. Other studies indi- cate that data storage systems are almost equally underused, with capac- ity utilization averaging between 25 and 50 percent. . . . As companies continue to add more applications, they have to expand their data cen- ters, install new machines, reprogram old ones and hire even larger numbers of technicians to keep everything running…

In other words, the current system is wasteful, inefficient, and expensive. It is no surprise that, especially in the current economy, many companies are seeking a more flexible, affordable computing alternative—one that can easily expand with their business.

Cloud computing benefits law firms in a number of ways, as we discuss more fully in Chapter 3. One important benefit is its inherent efficiency, made possible by virtualization. The process of virtualization allows a single machine to handle multiple applications and users by sharing computing power among many users. At its essence, this process partitions and replicates computing capacity so that every user who accesses a server or network has use of the resources, a process that is far more efficient than the wasteful client-server model.

Another important benefit is that cloud computing shifts the costs of maintaining and updating servers, data centers, and software to the cloud-computing provider. In exchange for the transfer of maintenance responsibilities and the ability to use the cloud-computing platform, subscribers pay the cloud-computing vendor a monthly fee. For many law firms, especially those just starting out or those seeking to revamp their outdated system, cloud computing is the perfect solution to the costly client-server model.

Cloud computing is undoubtedly the wave of the future for most businesses. The transition to cloud computing is a natural progression driven by the economics of computing. The costs of owning and maintaining data centers, servers, and computer software are simply too great, especially in the face of cheaper and more efficient alternatives. Should you continue to doubt that the cloud is the natural progression of, and the next stage of, computing and that it will soon be commonplace, you need look no further than our current electrical utility grid for proof, as explained in Appendix C.

Excerpted from Cloud Computing for Lawyers by Nicole Black. Published by the American Bar Association, 2012.