This story by The Register’s Chris Mellor perfectly illustrates the problem with using clouds for anything important. Briefly, a photographer was using Flickr to store his pictures online – eventually amassing more than 4,000 photos over five years. Being the helpful sort, he alerted Flickr to another user who was stealing content. Flickr mistakenly deleted HIS account, and all of those pictures now look to be gone forever. So what recourse does this unfortunate user have?

As I’ve told clients – and said in speaking engagements at industry events, weddings, christenings, birthday parties, and on street corners – you don’t have any recourse. If something bad happens, like your data being deleted, corrupted, or exposed to anyone else with a keyboard and a screen, what you’ll get from your cloud provider is pretty limited.

Assuming you’ve proven the problem was cloud provider’s fault, you’ll get a sincere apology. It might be abject or even groveling. And they’ll mean it – they don’t want to lose customers’ stuff, because that’s definitely bad for business.

The second thing you’ll get is a refund of any money you’ve paid – probably prorated – and maybe a credit toward future use. This is like having your liver removed because you ate tainted food, and then receiving a few cases of the same item from the food provider as compensation for your loss. It doesn’t make the customer anything close to ‘whole.’ In fact, it’s layering on insult to injury.

But the cloud providers can’t do anything more. Put yourself in their place: you’re now Mr. Cloud, offering inexpensive storage space to users, and only charging them for what they use at any given time. You have good practices, good employees, and a solid infrastructure.

Can you possibly indemnify your users against any harm that might be caused by something that you can’t control? As Mr. Cloud, can you guarantee that none of your dumbass employees might accidentally delete an important file? Can you afford to fight lawsuits brought by customers alleging grievous personal or business harm? No, you can’t.

Is there a technology solution to this problem? Yeah, maybe… storage is cheap, and you can make sure that you hold on to deleted files for an absurdly long time just to be certain the customer is really, really sure they truly want them deleted. Of course, there’s a cost to this; you’ll have to over-provision to beat the band, and it will definitely cut into your margins and make you less competitive.

You really have only two routes open to you. The first is to offer your service on a “Hey, we’ll do our best to keep your stuff safe, but…” basis, where you don’t make any guarantees. This is how many of the existing cloud providers are operating today.

Or you can take the route of the enterprise cloud providers, and negotiate comprehensive service level agreements with your customers. They’ll want assurances that your service will be highly available and highly secure, and that your employees won’t make mistakes. The two of you will put all of the requirements on paper and also outline remedies in case there’s a problem.

But it costs you money to provide this level of service, and you’ll find that it’s damn hard to make it pay off if you’re giving them a truly flexible, variable pricing menu. So you’ll put in clauses with minimum and maximum usage in order to give your business some stability. In searching around, you find a template that already has the language you need to protect yourself, and also gives your customers what they need in terms of service…

What you’ve found is a hosting or outsourcing agreement – and those aren’t so new, aren’t so trendy, and aren’t all that cloudy either.