The revelation that the US National Security Agency routinely hoovers up data uploaded to major technology firms tarnished the appeal of public cloud services.
By 2016, the resulting slowdown in the uptake of these services could have cost the US cloud computing industry up to $35bn in lost revenue, according to Forrester Research.
Enterprise reticence to host data with US-based companies was exacerbated earlier this year by a ruling by a US federal judge against Microsoft. The judge backed the argument that any company with operations in the US must comply with a valid warrant requiring them to hand over data to US authorities, even if the content were stored overseas. The ruling could make it even more difficult for US technology firms to win customers who are bound by conflicting domestic data protection laws.
Damage to public cloud
What the revelations from NSA whistleblower Edward Snowden have done, says Frank Karlitschek, is to put the issue of knowing where data is stored and who has access to it at the forefront of businesses' minds.
Karlitschek is founder and leader of the ownCloud project. ownCloud is one of a small number of open source software projects that allow organisations to set up a file-sharing system similar to Dropbox, but housed on their own infrastructure.
"The term cloud, as it was created at the end of the 90s, means 'This data is somewhere out there', by definition it means outside of my scope," he said.
"What's changed with Snowden is that people realise it's not so easy. They have to think about this data, there are security consequences, there are price consequences, lock-in consequences. This idea of cloud being somewhere else and I don't have to care has changed."
Given the choice, most companies would rather be the ones who have control over who has access to their data, he said, adding there had been a jump in inquiries about ownCloud from businesses following Snowden's revelations.
Beyond security concerns, Karlitschek said another reason that public cloud services fall down is the volume of data now being retained by organisations and the time it takes to transport it over the internet, rather than over faster dedicated links. One such ownCloud customer is the European nuclear research lab Cern that collects petabytes of data from its experiments with the Large Hadron Collider.
"If people want to use it [cloud] in the real world there are problems that no-one talks about. One interesting example is how to move terabytes and petabytes of data from local servers to the cloud. Not even talking about how to access them in the future but just the initial migration."
There are various other reasons why companies might choose to build their own in-house alternatives to cloud-based services. But there is also a counter-argument. TechRepublic columnist Patrick Gray contends that it makes no sense to discount cloud services, when they are can be more effective than what a firm can rustle up itself.
"While cloud applications are not without risk, many offer compelling functionality that most companies simply cannot match. For IT, some of these tools present opportunities for cost savings, or even pushing traditional IT tasks (and the associated costs) back into a business unit," he wrote.
And despite warnings from analysts to date there's also no clear indication that Snowden's revelations have slowed uptake of public cloud services. Amazon reported that use of its AWS cloud platform grew by 90 percent in the second quarter of this year, while Microsoft said revenues from its various cloud services doubled in the first quarter.
Why businesses are switching on to open source
Alongside increasing concern over where data is stored, Karlitschek, said businesses also appreciate the visibility that open source software gives them into the code base.
"We have customers who only use ownCloud because they can look into the code and audit it and make sure there are no backdoors," he said.
The attraction of being able to delve into open code runs beyond security, said Karlitschek, as running an open source project allows firms to customise software to suit the specific business needs of the organisation.
"We have people come to us and say 'OK, we're moving away from Active Directory and moving to SAML (Security Assertion Markup Language) two factor authentication for everything in our company. How can we do that? We build all their solutions for that," said Karlitschek.
"They can tweak the source code and write extensions to do that."
In general open source software is now viewed by business as a far more serious proposition than it was in the early 2000s.
"About 10 to 15 years ago open source software was this hobby software done by strange people. It wasn't really serious software, at the time that was closed source, proprietary software. Over the years the perception has definitely changed and people have realised that if they really want to use something in the enterprise which is critical and is going to be long-term supported and flexible then open source is of huge benefit."
What is ownCloud?
Karlitschek describes ownCloud as a "self-hosted Dropbox". Files hosted by on-premise servers can be accessed from a wide range computers and smartphones via a web interface or client. Files stored on these servers can be synchronised between folders on Mac OS X, Windows XP onwards and Linux PCs, as well as iOS and Android handsets. The service also allows for versioning and restoring deleted files. OwnCloud users in different organisations can also choose to share folders to allow staff to work together. ownCloud allows granular controls over how data is used, such as synchronising a file to iPads of salespeople in the management group in the US.
Karlitschek came up with the idea for the service in 2010, when he noticed the increasing use of web services such as Gmail and Dropbox
"The idea of free software and open source is of course that you control all your data and your software and you can look into it and learn and improve. This is good for the software that runs locally but it doesn't really work for software that runs in the cloud," he said.
Users can make a wide range of data available through ownCloud, with connectors for a variety of local and cloud storage, as well as Windows file servers, SFTP and Sharepoint servers. A RESTful API is available to help build third-party apps on top of the platform. It can also work with a variety of authentications systems, such as Active Directory, Lightweight Directory Access Protocol and SAML. The service encrypts data in transit and at rest using AES-256.
- Frank Karlitschek will be giving a talk at the LinuxCon Europe event in Dussledorf, Germany in October.
Nick Heath is chief reporter for TechRepublic. He writes about the technology that IT decision makers need to know about, and the latest happenings in the European tech scene.