Businesses using cloud computing need to scrutinise data security more than those using traditional forms of IT outsourcing, according to a new report.

Research by Forrester suggests that cloud computing gives rise to a new set of security considerations.

The report, by Forrester analyst Dr Chenxi Wang, warns businesses not to go into the cloud without a clear idea of the business justification for doing so.

It adds that firms should have a clear understanding of the security, privacy and legal considerations involved in using a cloud computing provider’s services.

For example, they should conduct a feasibility study looking at a vendor’s practices and encryption system.

This should be followed up by continual monitoring of the service to ensure compliance is maintained, according to Dr Wang.

Gartner recently predicted that software-as-a-service will become even more popular in 2009, with the global market reaching $9.6 billion (?6.4 billion), up 21.9 per cent compared to last year.