Traditionally, companies have devoted significant percentages of their overall budget to managing, supporting and scaling their own IT systems and networks. A company's growth and the size of its IT infrastructure typically have had a direct correlation. Until recently, a company's IT infrastructure options were restricted to incrementally scaling up internal capacity or outsourcing to third parties, all or some portion of the IT infrastructure. While the build vs. buy paradigm offers a variety of benefits and challenges, the balance-indeed the benefits and challenges-are in a constant and dynamic state of review and re-evaluation. Especially in an economically challenging environment, companies eagerly search for new solutions to their IT sourcing challenges-solutions that offer reliability, scalability, security, and a difference in their capital and operating expense budgets.

Cloud computing has recently risen to the forefront as potentially one of the most dynamic and most flexible solutions, to solve these companies' IT infrastructure needs with an innovative, cost-effective model. Cloud computing is the term ascribed to the industry shift and transformation from companies either hosting and managing their own applications and data on local servers, or entering into hosting arrangements with third-party providers, to a grid computing model in which users access a shared computing environment typically being provided by large and well-entrenched technology companies.

As we explain below, cloud computing may not necessarily be the silver bullet for German companies or companies doing business in Germany, even if and when it may indeed be an attractive alternative and viable option.

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