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Either Google needs to put all their apps on servers inside your perimeter or compliance laws need to change to allow companies to store data in the cloud as long as there are reasonable security measures. I would bet on the latter. In the end it won't be just office-in-the-cloud that drives the change but also S3 and EC2.

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Exactly. GE may have the resources to safeguard data on its own servers better than Google could, but the average small/medium business almost certainly does not.

The over all problem is that only a certain set of people should have access to non publicly disclosed data. Putting this data on another companies servers is a gross violation of the law.

If a Google employee can see the raw data that belongs to a Google Docs user then Google Docs will never be sufficient for fully replacing locally installed software.

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