Meeting data privacy, residency and security requirements in the cloud

In survey after survey, CIOs and CISOs express concern about adopting cloud computing due to "data security issues." Many organizations are addressing their concerns by encrypting data in the cloud. An alternative solution is to tokenize data before it passes through your firewall so sensitive data never reaches the cloud.

In the Fifth Annual State of the Network Global Study published by Network Instruments in March 2012, 74% of the survey respondents indicate that their top concern about cloud computing is "security for corporate data." This survey is consistent with many others that always seem to identify data security concerns as a leading inhibitor to the adoption of cloud computing.

Actually, I think "security" is a catch-all phrase that also encompasses concerns about data residency (i.e., where is the data?) and data privacy (i.e., who can see our personally identifiable information, or PII?). Many organizations are fearful of or prohibited from placing data in the cloud due to restrictions on access to data or compliance with government or industry regulations.

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For example, European data protection laws prohibit personal data that can be linked to a specific person from moving outside of European Union (EU) or even specific country borders. Such laws can prohibit organizations from storing or processing data in the cloud because infrastructure providers may store, process or back up data in multiple global locations. In the U.S., regulations such as the Health Insurance Portability and Accountability Act (HIPAA) require maintaining security and privacy around personal health information (PHI). The complexity of doing so may dissuade healthcare providers from using cost-effective public cloud-based solutions that could slow the rising cost of healthcare.

One way to get around the issues of data security, residency and privacy is to obfuscate the data that goes into the cloud. Two common methods of obfuscation are encryption and tokenization. Using either of these approaches ensures that data remains undecipherable to prying eyes while the organization enjoys the benefits of cloud-based applications.

You are familiar with encryption, the process of using algorithmic schemes to transform plain text information into a non-readable ciphertext. A key (or algorithm) is required to decrypt the information and return it to its original plain text format.

Tokenization is an increasingly popular approach for the protection of sensitive data. It involves the use of data substitution with a token (or alias) as a replacement for the real values. Unlike encryption, which uses a mathematical process to transform data, tokenization uses random characters to substitute for the actual data. There is no "key" that can decipher the token and turn it back into real data.

In the process of tokenization, the sensitive data is sent to a centralized and highly secure server called a "vault" where it is stored securely. At the same time, a random unique set of characters (the token) is generated and returned to your systems for use in place of the real data. The vault manager maintains a reference database that allows the token value to be exchanged for the real data when it is needed again. Meanwhile the token value, which has no meaning whatsoever to prying eyes or cyberthieves, can be used in various business applications as a reliable substitute for the real data.

Merchants often use tokenized data as a substitute for sensitive credit card information after a sale has concluded. This allows a merchant to perform sales analytics on customers' transactions without putting the real card data at risk. What's more, PCI prohibits the use of live card data for anything other than the payment transaction. By tokenizing post-transaction data, merchants can reduce their PCI burden because no sensitive data exists in their backend systems.

The same methods can be applied for other types of sensitive data, including patient records, customer account records, human resources information and so on. Tokenizing the real data takes it out of harm's way and addresses the requirements for security, residency and privacy. Tokenized data can be stored and used anywhere -- even in the cloud -- because it can't be turned back into the real data if lost or stolen.

PerspecSys offers a data protection solution called the Cloud Data Protection Gateway. The gateway allows you to protect sensitive data when using popular cloud applications. As data is prepared to leave your organization, it can be tokenized or encrypted so that it never enters the cloud in the clear. The real data, in fact, stays behind your own firewall.

The heart of the PerspecSys Cloud Data Protection Gateway is the PRS Server -- "PRS" standing for "privacy, residency and security." The PRS Server provides the data management services and performs the encryption and/or tokenization processes. Cloud application-specific requirements are supported by installing and configuring application-specific adapters; for example, there's an adapter for Using this solution allows you to fully utilize all aspects of the CRM application in the cloud without ever sending sensitive data outside your own organization. End user SaaS application functionality and performance are preserved, even with the strongest levels of encryption and tokenization in place.

This kind of data protection solution enables you to enjoy the cost of ownership and elasticity benefits of the cloud while still meeting your requirements for data privacy, residency and security.

Linda Musthaler is a principal analyst with Essential Solutions Corporation. You can write to her at


About Essential Solutions Corp:

Essential Solutions researches the practical value of information technology, and how it can make individual workers and entire organizations more productive. Essential Solutions offers consulting services to computer industry and corporate clients to help define and fulfill the potential of IT.

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