The types of compliance and their requirements vary. The thread below is mixing HIPAA, SOX, etc. That is only applicable for public companies that deal with patient information (Insurance, Hospitals, Device Manufacturers). Different industries are impacted by different types of regulations (Financial services for example has Office of Thrift Supervision, SOX, Graham Leach Bliley, Basel I & II, PCI, etc) Healthcare also is overseen by the FDA because hospitals manufacture blood for example.
Outsourcers such as Perot, CSC, IBM, Accenture, Unisys, etc have had solutions around various verticals that are highly regulated after the legislation passed(Government, Financial Services, and Healthcare - HIPAA and SOX). SAS70 is the audit control for those smaller SMBs/SMEs that most hosted solution providers provide to audit and to the companies they serve to prove that data is encrypted, isolated and safe. This is a practice that has matured over the years and there are many good documented "How to Guides" - www.itpi.org - for Visible Ops series. I am copying one of the co-authors and a formidable expert in this area - in case he would like to comment.
Yes CXOs need visibility into their organization to comply with SOX - that is ONLY for public companies. For example, large private healthcares - do not have to worry about SOX. HIPAA is different as is PCI because they affect anyone in contact with personal information (health, financial). HIPAA and other Personal Health Information Acts in Europe, Japan (which are more stringent) addresses access to patient information (health, billing, etc). Depending on the PHI Act (such as Europe) some require that it be hosted in the country of origin, others are less stringent requiring that they be encrypted, access controlled, etc. The outsourcer will need to provide SAS70 findings from an independant audit body of which the CXO needs to review. The CXO will not go to jail but will more than likely move to a different MSP if the government finds material discrepancies. They have time to clean them up particularly if it is something that resulted based on process or technology issue versus blatant fraud as what happened in the Enron case that brought about SOX.
One suggestion would be to actually read the regulations you are speaking about - see attachment for SOX. It is not the regulations that require reform (many of them were generically written - not to a specific technology per se) but the prescriptive guideline controls such as COBIT (used by auditors to test the technical system) and frameworks like ITIL and ISO that do need to be adjusted. That is not up to the politicians but the government commissions from NIST in the US - similar agencies in other countries to define and enhance. New standards are forming and being added to ITIL (look at V3 that changed from V2 to add a DML - definitive media library over a DSL - definitive software library and more around federation) - why? Because the technology evolved and changed.
The biggest GAP here for the cloud is how newer technologies - like virtualization - impact those controls making it difficult to enforce some and others obsolete. It is important to understand the risks of these new technologies for GRC (governance, risk and compliance) and either find perscriptive work arounds or select technologies that were created post regulations (after 2004) so that compliance and how it evolved with NIST will have a greater chance to being baked in as part of the architecture and not an afterthought until it is an issue.
It is not visibility as is stated - else the large outsourcers that have made a successful business off of healthcare verticals - would not still be in business. More importantly most small doctor's office etc are less than 100 employees - they could not afford a big datacenter etc for compliance and need to look at alternative means like the cloud.
The key here is to join groups like W3C that are defining Common Information Model or others that influence NIST direction, ITIL or COBIT reform (the majority uses ITIL framework or ISO).
Have a great weekend.
Cheers,
Jeanne
From: Rao Dronamraju
“The problem here, I believe. is one of verification. If the CXO is 100% guaranteed and convinced that the ISP solution is compliant then he will have no problem outsourcing. Remember he has to believe his own IT people and their system being compliant. Can the ISP convince him that their system is "SAME" as the internal system? There lies the problem.”
No, the problem in cloud scenario is, CONTROL and VISIBILITY….on his/her own premise, he has a LOT of CONTROL and VISIBILITY. He/She is directly responsible for the CONSEQUENCES of anything going wrong in terms of compliance. In cloud scenario, that responsibility has PARTIALLY shifted to the CSP. The CXO is still responsible for the content and authenticity of the financial information.
I am not sure why lawyers would be interested in fixing this?....The stake holders here are the companies, CSPs and the government….they are the ones who are most benefited by clouds.
Ofcourse, the lawyers employed by them will work out the legal issues.
Would the govt. by itself look into this?....don’t know….
Your example of toy manufacturing and compliance is a good example to convince the CXOs that outsourcing compliance is in practice and working.
“NIH has research grants to come with solutions that allows for increased compliance. I hope if the solution is very difficult then HIPPA requirements may have to be changed. It will take time.”
Government can wait….they don’t run on making profits….for businesses TIME IS PROFITS….they cannot wait….they have to take the initiative and leadership and make things happen.
From: cloud-computing@googlegroups.com [mailto: cloud-computing@googlegroups.com ] On Behalf Of satish regeSent: Saturday, May 02, 2009 10:15 AMTo: cloud-computing@googlegroups.comSubject: [ Cloud Computing ] Re: Clouds and Compliance
I feel that the lawyers will NEVER do it is too strong. It aint going to happen is stonger. I belive they didn't know that the problem exists. It may take time for them to recognize the problem and then come up with regulations to solve it. Law has always been behind the technology development. So how long it will take then i the question?Note exchanging health records electronically and compliance with HIPPA is a big problem. The present government is making progress to overcome that by trying to seamlessly move the records from Pentagon to Veterans Affairs. NIH has research grants to come with solutions that allows for increased compliance. I hope if the solution is very difficult then HIPPA requirements may have to be changed. It will take time."
Today I know an ISP who has an excellent compliance solution and good market, is willing to try the SaaS model.
But when I did the analysis, I realized that unless the law is changed, CXOs are not going to come forward and place their compliance systems in a public cloud as long as they have the 100% of the compliance responsibility is with them….so this company just yet does not have the SaaS market….may be in 6 to 12 months…."
The problem here, I believe. is one of verification. If the CXO is 100% guaranteed and convinced that the ISP solution is compliant then he will have no problem outsourcing. Remember he has to believe his own IT people and their system being compliant. Can the ISP convince him that their system is "SAME" as the internal system? There lies the problem.
Let us take a simple problem. Toys sold in US have to be compliant with certain safety standards. Mattel outsources the manufacturing to China and takes the responsibility of compliance with US laws. (They did have problem with a particular toy recently and the product was recalled.) Also, I do understand, the requirements on toys safety are not as complex as the problem we are discussing.So the question is can we build software systems that are compliant with complex law and guarantee their behavior? We all have our own opinions and experiences with regards to software verification technology. It also has a long way to go.-satish
On Fri, May 1, 2009 at 11:52 PM, Rao Dronamraju <rao.dronamraju@sbcglobal.net> wrote:
“Who wants to sign up and work with the lawyers so the regulations can be modified to the technical opportunities? Willing them to change isn't going to happen.”
Exactly…
Today I know an ISP who has an excellent compliance solution and good market, is willing to try the SaaS model.
But when I did the analysis, I realized that unless the law is changed, CXOs are not going to come forward and place their compliance systems in a public cloud as long as they have the 100% of the compliance responsibility is with them….so this company just yet does not have the SaaS market….may be in 6 to 12 months….
If someone knows of a case where a corporation has gone ahead and using a SaaS compliance solution in the public cloud please let me know….I am very interested in learning their business case including the legal case….
From: cloud-computing@googlegroups.com [mailto:cloud-computing@googlegroups.com] On Behalf Of brian cinqueSent: Friday, May 01, 2009 7:29 PM
To: cloud-computing@googlegroups.com
Subject: [ Cloud Computing ] Re: Clouds and Compliance
Satish
Whats interesting about your comment on the lawyer community must change - reality that is not going to happen. Each region; geographic, national, or local has their own laws. I am referring to Germany laws are far more strict then that of Australia ; while Massachusetts privacy laws are far more strict about privacy then say Iowa . Who changes? Is Iowa going to adopt MA laws? or is Iowa going to create a local Safe Hard bridge to say Germany ? Sadly the reality is no. The question of Privacy remains and which privacy laws must I adher to? All of them? Some of them? Target markets? Amazon has a European Cloud but is that a stop gap or a reality of compromises between the clouds? Also securing your data (inflight or at rest) is not a governance/compliance get out of jail card. When companies say they are SAS-70 2; great but will that hold up in Uraguy courts (probably not). So what is the answer? Well right now each "Cloud" contract is being treated as an outsourcing contract. Will that scale? Time will tell but in the meantime if Cloud expands then being a contract lawyer is the place to be. But question I have for the vendors who are bridging mulitple cloud access methods via multiple IaaS providors. and providing a service. How will those contracts be structured? The question I have is - does it matter where your data is? The answer is yes but I had hopes that the Privacy Group meeting in Madrid - October 09; would create an attempt at general standards which in turn would allow for cross border clouds. Not sure the url is right now but if someone wants to find the conference url please do. From memory the agenda is scaled back and getting agreement on a global standards will have to wait for another year. Which means the governance question will remain for another year. Will the lack of Cloud Standards also remain as well?More and more I think about it. The regulators that we say must change are lawyers by trade. We are technical folks demanding change to open the true potential of cloud but are constricted by the ambiguity and fear of terms like "reasonable". Who wants to sign up and work with the lawyers so the regulations can be modified to the technical opportunities? Willing them to change isn't going to happen. Brian
On Fri, May 1, 2009 at 4:12 PM, satish rege <srege007@gmail.com> wrote:
The main difficulty with compliance of a law, that you are so concerned about, is that the laws are made with knowledge of the previous technology and they may not be suitable for a new one that flourishes. In general the new technology cannot provide all the advantages if it has to meet the old law. Thus there is a chicken and egg problem which I feel the lawyer community has to solve. That is to make laws with technology change in mind. Perhaps the new administration, with its technology savviness, will try to look into this age old problem.-satish
On Fri, May 1, 2009 at 12:34 PM, dave corley <dcorley75@gmail.com> wrote:
Sounds like an opportunity for a Storage Brokerage as a Service Provider and local storage product (NAS and SAN) vendors.Storage Brokerage as a Service Provider - host EMC Atmos or similar storage brokerage software. Brokerage maintains enterprise-specific storage policy and SLAs. Brokerage also specifies target repositories for stored information based upon metadata contained within file/information. If super-collossal-critical-SOX-compliance data is required to be produced for audit, policy adjusted for associated information classified through metadata as "compliancy-important" as follows:1. Primary backup to local store (premise NAS for small business, premise SAN for enterprise, mattress for consumer). Keep the family jewels and photos of the kids so 2. Secondary backup to storage repository SP "A".3. Tertiary backup to storage repository SP "B"4. Encrypt all data AES256 prior to all backups5. Establish policy/process, train your IT folks/VARs responsible for processes. If this data is so important, assign a "custodian" responsible for maintaining information metadata. Heck, most companies do this kind of item 'marking' for inventory control. 6. Data integrity monitor frequency - every X days7. Data loss reporting - within Y hours.Other less expensive/expansive policy applied to less critical information.Additional policies to allow storage arbitrage - if Wells Fargo's storage repository rates drop, substitute them as SP "A" and drop "Fred's MattressInTheCloud". Tiered/layered security/Defense in depth - not just a military concept. Disclaimer: I have never worked for EMC, SP "A", SP "B" or Fred's MattressInTheCloud.Dave
On Fri, May 1, 2009 at 12:50 PM, Rao Dronamraju <rao.dronamraju@sbcglobal.net> wrote:
Folks,
The Compliance landscape of Clouds looks VERY MURKY.
The fundamental problem is the Criminal Penalties associated with non-compliance although Civil Penalties are also equally troublesome.
For instance, Sarbanes Oxley says, the CXOs are responsible for the integrity of the financial information and also the integrity of the controls in place.
Not only they have to signoff on the integrity of both, external auditors have to attest to the authenticity and integrity.
So if and when enterprises plan to move to public clouds, there are some interesting situations one would run into.
If suppose there is non-compliance in the establishment, management and maintenance of the controls, who would be responsible?....
The CSP or the CXO of the enterprise?....
Similarly, if the integrity of the financial information is breached, who is responsible?....
Remember there are criminal penalties involved not just civil penalties?....
Can any of these be fixed with SLAs?....probably the civil penalties but definitely not criminal penalties. I do not think the law would allow a CSP to go to prison in place of a CXO.
May be some legal expert in the group can speak to it.
So the interesting problem here is, how would you distribute the compliance responsibilities and liabilities associated with non-compliance between the CXOs and the CSPs?....
The only way seems to be through legislation. Unless the legislature changes the law in such way that the penalties are levied on the parties RESPONSIBLE for the integrity of the controls and the financial information. If the controls fail CSP goes to jail, if the financial information is fudged the CXO goes to jail.
How likely is this to happen?.....
How soon cloud this happen?....We all know how fast the legislature moves…..
The adoption and migration of enterprises to pubic clouds could depend a lot on this.
Other alternative is, do not move the compliance systems to the clouds at all…..until the legislature catches up with the technology.
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