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Why the cloud is good for startups

Melinda Gibson

The cloud is and will continue to be key to the success of startups, writes Dan Matthews for Raconteur.

Successful startups like Airbnb and Uber would not exist without cloud computing. “Both companies leveraged cloud technologies to expand their computing power and scale, including online payment processors and cPaaS (capacity-Planning-as-a-Service) solutions to notify their users via text of arriving drivers and reservation confirmations,” says Carlos Aragon, director of real-time communications company Genband’s communications Platform-as-a-Service (PaaS) Kandy. “The cost of having to build all of this functionality in-house would have killed their business models before they were even born.”

Thanks to the cloud, Airbnb was able to launch in 2008 with just $50,000 of capital, focusing on growth and providing a high quality service without having to make a huge investment in infrastructure.

In fact, cloud services will become cheaper and cheaper – maybe even free – as market leaders such as Amazon, Google and Microsoft threaten smaller providers like Box and Dropbox as they compete in what Dan O’Mahony, enterprise and cloud solutions architect at KYOCERA Document Solutions, calls a “race to zero”.

According to a study by Cloud Industry Forum, 82% of small businesses currently use at least one cloud service; 71% expect to increase their use in the next 12 months; 8% have moved all of their IT to the cloud; and 62% expect to do so in the future.

And the cloud is not just about storage. Apps and services including Skype, QuickBooks, Evernote, Slack, Office 356 and Google Apps, all of which benefit small businesses, owe their success to the cloud.

Potential problems

There are pros and cons to all innovations – and the cloud is no exception. Here are three potential downsides to the cloud for small businesses:

1) Privacy. According to the study by Cloud Industry Forum, 70% of small businesses expressed concerns about data privacy. But according to Eva-Maria Dimitriadis, COO of security and data sector fund C5 Accelerate, they have no need to worry now the likes of Amazon and Microsoft have entered the market, bringing with them their multi-million-dollar security budgets.

2) Adaptation. You might have to help your staff adapt to cloud working by providing encouragement and training.

3) Cost. “The biggest area to be careful about is cost, making sure the ease of accessing and scaling infrastructure does not make the costs spiral up,” says Kamal Anand, vice president of the Cloud Business Unit for application delivery controller manufacturer A10 Networks. “So, having good governance around cost-monitoring and management is critical.”

Success story

UK company Sonovate provides finance to the contract recruitment industry. Both its internal operations and its product are cloud-based.

Its founders, Richard Prime and Damon Chapple, run the business from separate locations (London and Cardiff respectively) and have a mobile workforce of 116 employees.

Being cloud-based has enabled Sonovate to lure the best talent with the promise of a flexible working arrangement. Meetings are held in Google Hangouts and project management app Trello is used to make sure all team members are on the same page.

“This kind of flexibility works well for our business. It’s a great incentive for our employees and it means that regardless of where I am, where Damon is or where our employees are based, productivity is always maximised,” says Prime. He adds that the cloud has enabled Sonovate to scale incredibly quickly.

Your (not so) new best friend

Dan Matthews calls the cloud a small business's “best friend”. “In layman’s terms, the cloud enables startups and small businesses to compete on a global footing,” he writes. “Instead of investing heavily in infrastructure and hardware, they can switch on services and scale them as operations grow.”

Source Article: Cloud Catapulting Startups Into The Big League
Author(s): Dan Matthews
Publisher: Raconteur