All Aboard the Cloud Bandwagon? 3 Questions to Decide Whether Cloud Computing Is Truly Right for Your Company

Editor’s note: Believe it or not, jumping on the cloud bandwagon isn’t for everyone. In this guest post Greg Arnette, founder and CTO of cloud archiving company Sonian (an OpenView portfolio company), provides three questions to help you determine whether leveraging the cloud is truly the right move for your company.

When I founded Sonian, a cloud search and archiving startup, in 2007, the concept of the cloud — or, maybe more specifically, the adoption of it — was still in its relative infancy. At the time, Amazon’s Jeff Bezos started publicly articulating themes that ushered in the cloud revolution. “IT” should become a utility, and economies of scale will lower overall costs. The “cloud” had the potential to change the way businesses (and, to a lesser extent, individual consumers) utilized computing resources.

Back then, SaaS startups were particularly enamored with the cloud — especially startups with founders that knew how difficult and expensive it was to build dedicated hosting infrastructures. Furthermore, the cloud allowed startups that were inundated with distractions to simply focus on their domain expertise, without the mess of what I call “data center muck.”

Today, “the cloud” has become part of technologists’ (and, thanks to companies like Apple, Evernote, Dropbox, and Spotify, the average consumer’s) lexicon, and cloud computing is a full-blown trend with a bandwagon full of supporters. And for good reason. For a lot of high-tech startups, the cloud is a panacea for all the hassles of operating a data center. It can simplify and reduce the cost of managing large amounts of data, and it can improve the cost efficiency of delivering a specific service to users.

But here’s an argument that might shock you, especially since it’s coming from the founder of a cloud archiving company: the cloud isn’t for every startup. In fact, depending on the circumstance, leveraging the cloud can be more of a pain than a solution.

How can you tell if it’s right for your business? Here are three questions businesses should ask themselves before jumping aboard the cloud bandwagon:

1) What’s your business model?

In other words, are you giving away a service and monetizing in other ways (like Gmail), or are you free to paid (freemium) or do you charge up-front for your services? That’s an important question to ask, largely because the economics you need to achieve for application infrastructure hosting expense also need to be correlated with a risk management assessment for uptime and data resiliency. Free or freemium customers should expect less uptime because, well, you get what you pay for. But paid customers expect nothing less than stellar performance, and to build that in the cloud requires more planning and overall costs.

2) What’s your application workload?

If your product is a fairly simple, web-based productivity system, then it’s probably not a great cloud use case. If, however, your application manages large amounts of data or is a paid subscription model that creates significant workloads, the cloud might be perfect. It can allow your business to manage its technology architecture around the various steps in its workflow, making it much more versatile and powerful.

3) Will your customers buy into the cloud?

As trendy — and useful — as the cloud is today, none of it matters if the potential downsides of the cloud scare off your customers. There are some data sensitive markets (like healthcare, for example) where the cloud might be viewed as a negative because of data security concerns and potential outages. And if that’s the case, rushing into the cloud guns blazing could be a big mistake.

At a high level, leveraging the cloud is all about having the right use case. If you don’t really need it or you won’t fully realize the benefits of it, then why use it?

That being said, the cloud isn’t a mirage. In fact, it can be hugely useful in the right context. Assuming you pass the three-question test above, here are four compelling reasons for startups to begin using the cloud:

 

• Cost efficiency: Building a data center is costly. Leveraging the cloud, on the other hand, can be relatively inexpensive, depending on your needs. It takes less up-front capital to get started and provides significant agility, allowing startups to reach the Holy Grail of minimum viable product faster and deliver it to its customer audience much quicker than previously possible.
• Better focus: Rather than wasting time on ancillary ramp-up tasks like building a data center, startups can focus on their core domain and allow the cloud to manage everything else in the background.
• Prepare for scale upfront: Because the cloud helps companies reach a minimum viable product faster, founders can prepare the company for scale early on and execute it much quicker when the business is ready for it. By preparing for scale upfront, a startup can step on the gas when it needs to without wasting time (and money) ramping up its data capacity.
• Stronger credibility: Yes, the cloud has its downsides (which I’ll cover in a future post for OpenView). But because of the improvements made to cloud infrastructure and security in the last decade, startups that deploy from the cloud can also create instant credibility. Customers in the right markets are much more likely to trust a startup backed by Amazon Web Services, for example, than one that’s backed by a hosting provider with a poor reputation.

Deciding whether or not to use the cloud always ties back to your customer audience and the problem you’re solving for them. If that problem involves large amounts of data that needs to be managed in real-time and scaled rapidly, then the cloud is a perfect option. If your customers are paralyzed by the thought of potential security breaches or cloud outages, then maybe you should stick to more traditional data hosting alternatives.

Ultimately, the goal of leveraging the cloud is either to create a service that is safer and more reliable than your customers can create with their own data center, or to improve the cost efficiency, scalability, and burden of your own data management. If cloud services can help you achieve those goals, then you should absolutely feel free to jump aboard the cloud bandwagon.