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(Editor’s note: Paul Schmidt is the founder and president of Photodex. He submitted this story to VentureBeat.)

Cloud computing has been building buzz for a while now and is fast becoming the rage. But for all the hype, there are a lot of questions – about its effectiveness and whether it’s right for entrepreneurs. I won’t claim to have all the answers, but here are five things to consider before you begin relying on the cloud.

Outages – Anything that requires an internet or cell connection to function deserves a second look. This isn’t just a matter of moving or syncing data. If you’re storing your files in the cloud, you may only be able to get at them with a decent connection.

Losing connectivity occasionally happens and it’s invariably when you need it the most. If there isn’t an alternative to a cloud feature, that should sound some alarms. A copy of all critical data should always be stored on a device that is physically in your control. Demand failsafe features from your vendor, so you can do what you need to do without a connection.

Speed – Some cloud offerings automatically or manually sync files across devices. This sounds great until you want to move something really large, like an HD movie. Copying the same file onto a flash device is generally faster and pretty straightforward. Using a network to move some types of data may actually be more cumbersome than other technologies.

You should always have a different way to move and store data than the cloud, not just because the cloud might disappear, but also because it might end up being more cumbersome for some purposes.

Privacy / Security – When you store data on someone else’s computer, they can see it. Even if you trust the company that controls that storage, data can get into the wrong hands.

The best way to keep your data secure and private is to store it on local physical devices you personally control. Another privacy consideration is how your cloud provider cooperates with authorities. Once something is uploaded to the cloud, it often stays there.  Even if you think an item has been deleted, copies may still exist and be freely available to authorities without your consent. It’s stupid, of course, to do anything illegal – especially via your business, but remember that if you expose that illegality to a cloud service, you double the chances of being caught.

Compatibility – Companies, from time to time, need to share data with others – and having competing cloud services can be problematic when those needs arise. Proprietary formats, protocols and compatibility have always been major stumbling blocks, but the cloud can complicate that. Choose your vendor to avoid being locked into a particular product.

Switching platforms – If you decide to change platforms and need to move your data to your new device, you’ll need to determine if that data is compatible with the data from the previous platform’s cloud. This can be troublesome for companies that don’t consider the consequences before making the move. And it can lock them in for a lot longer than they had planned.

Cloud features are long overdue and wonderful advancements that can be a tremendous benefit for entrepreneurs in some instances. And they’re becoming more common. But most people probably don’t realize how disconnected and locked-in they can be until it is too late.

Before you commit, ask yourself: “How will I do this when the cloud disappears?” If you only rely on features that have legitimate backup, cloud computing can be a useful and convenient tool to help you run your business.

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