Apple’s announcement earlier this week that it was finally entering the cloud space with a service that makes music, photos, videos, apps and other documents accessible via any Apple device is one more sign that cloud computing is becoming more mainstream.

Cloud computing gives users access to files and applications over the Internet rather than from a local computer, which can reduce costs and alleviate headaches for small businesses that won’t need an on-site IT infrastructure.

But the popular model is not without risks. High-profile outages from companies including Amazon.com (AMZN) underscores the need for small businesses to take a pragmatic approach when it comes to embracing cloud computing. 

“The biggest concerns companies large and small have about the cloud is reliability, which goes hand and hand with ceding direct control,” said Todd Benjamin director of enterprise hosting at Hostway, a Chicago-based data hosting company.  “The promise of the cloud is it’s done better than I can do it myself, which for the most part is true, but not automatic.”

Do Some Due Diligence

Benjamin advises before a small business moves any applications or infrastructure to the cloud, it confirms the provider’s level of reliability.

“Businesses tend to assume the service provider has high reliability, zero redundancy and all the things they would like to have,” said Benjamin. “Maybe they do, or maybe they don’t.” He added owners need to fully understand what level of service they are getting before they sign up. 

“We saw from the recent Amazon outage that a whole bunch of companies didn’t take advantage of Amazon’s geographic redundancy,” he said, noting that it was up to the business owner to use the service, which would have prevented any downtime as a result of the outage.

Make Sure it’s Compliant

For small businesses that deal with sensitive data like financial information, medical records or credit card numbers, not only do they have to adhere to compliance requirements, so does their cloud provider. 

“The business is responsible for whatever regulation is governing the data,” said Benjamin. “It’s reasonable to require the provider to demonstrate they are compliant.”  He said the cloud provider that is hosting confidential software or physical infrastructure should have certification that their systems meet the requirements.

Create a Checklist

Before choosing a cloud service provider, Benjamin suggests small businesses create a checklist to ensure a provider meets their criteria on reliability, security and compliance.

Small businesses should also consider the consequence if something goes wrong, like an outage, and what that would do to business. A non-working payroll application might be easy to overcome, but a down credit card processing application could mean lost sales and revenue.

Benjamin noted that if a small business is looking to move its physical infrastructure to the cloud, going with a provider with only one data center is a mistake. “Data centers fail, whether it’s a tornado, earthquake or human error. The chance of a single location going down is high versus two locations.”

Play Hardball with the Service Agreement

A 'service level agreement' is a part of a contract that details the level of service, and with many contracts and with cloud providers, this is where they guarantee service won’t go down. However, Benjamin said that most of the time it’s just another piece marketing material designed to drawn to entice small businesses.

With many of these service agreements, the penalties for downtime is minimal if at all, Benjamin said. He suggested small businesses demand something concrete if the service does go down like a month of service for free or some type of big credit.  “You want something with teeth in it.”

Buyer Beware

While cloud computing offers many advantages, Benjamin said caveat emptor applies in this arena. Like with most hot items in the tech world, small business owners should expect the cloud market to become saturated—and not all providers will survive.  Owners should be skeptical and thoroughly research a provider before signing up.  

“Don’t assume because there’s a lot of buzz and hype that everything is wonderful. Be prudent just like with everything else,” said Benjamin.