What Do Small and Mid-sized Cloud Computing Companies Need To Begin Operations?

What Do Small and Mid-sized Cloud Computing Companies Need To Begin Operations?

“Cloud Computing” is one of the most popular tech buzzwords out there now, and completes with “Nanotechnology” as the leading technology of the future. In spite of some highly-publicized failures (See: Should You Be Concerned? A List of Recent Cloud Computing Failures – Intuit Goes Down) and obfuscation of the term itself (See: Do You Know What Cloud Computing Is?), cloud computing remains on track to become one of the biggest employers (See: How Cloud Computing Can Create Jobs) and revenue generators in the near future (See: Where Is Cloud Computing Going? Up, Up And Away! ). Hence, it is not surprising that different state and local governments across the state are competing with each other to attract cloud computing companies.

Now, cloud computing companies can be broadly classified into two broad categories – big, who provide IaaS and PaaS services, and small, typically with SaaS expertise (for a fuller understanding of these terms, see: Cloud Computing For Dummies: SaaS, PaaS, IaaS And All That Was ). While it is easier to determine what the big companies like Amazon and Rackspace would want (land, electricity and bandwidth at low costs), the requirements for smaller niche companies are more difficult to deduce. Therefore, I decided to get that information directly from the best source possible, the companies themselves.

I spoke with Jerry Huang, CEO of cloud storage solutions startup Gladinet, and Erica Brescia, CEO of BitRock, the developer of BitNami, which simplifies the process of deploying web applications natively, virtually and in the cloud. Readers of CloudTweaks may not be unfamiliar with Jerry, with the website having carried his interview before (See: Jerry Huang, CEO of Gladinet: Interview with CloudTweaks ).While Gladinet is based out of Florida, BitRock is headquartered in Spain and has its US offices in California. The conversations were carried out over the phone and provided interesting insights in what small and mid-sized industries require and desire from any location.

Jerry opined that for smaller companies looking to grow, availability of venture capital would be an important consideration. In this respect, he cited the examples of Silicon Valley in the west and Boston in the east as being particularly welcoming to start-ups. At the same time, he agreed that for bigger companies like Salesforce.com and Rackspace who have abundant capital, availability and cost of physical infrastructure would be more important. Here, he drew an interesting parallel with the development of Atlanta as a Delta hub.

Jerry said that similar companies in close proximity would be a definite benefit for a cloud computing start-up. He also mentioned the importance of the availability of inexpensive office space and talent, saying that local universities can make a big difference in this area. Both of these points were also mentioned by Erica at the beginning of our conversation where she stressed that in spite of a spike in jobs, companies were finding it increasingly difficult to find the right people. She proposed that companies should be able to develop relationships with educational institutions to nurture, and ultimately, hire talent.

Altogether, Erica provided a slightly different perspective from Jerry as the head of a company that is not a start-up like Gladinet, yet not a behemoth like Google. Erica mentioned that the quality of life and the cost of living would also be important decision variables for a company looking to start operations in a new location.

Erica mentioned that she believes that one of the reasons Rackspace is located in Texas is because of the favorable tax regime and low cost of living. Because Rackspace is headquartered in San Antonio, a city lacking a deep pool of technical talent, they have taken the approach of “growing their own” talent and started Rackspace University, which has reaped rich dividends. She did declare that although she was not an expert in requirements for companies at the lower part of the “stack”, she thought that skill requirements even for managing data centers have increased substantially over the years as more routine tasks have been automated. Hence, availability of talent is important both for comparatively lower-tech data centers as well as niche SaaS outfits.

After these conversations, what I could deduce was that for start-ups, an investment climate and availability of talent were most important. For mid-size companies, usually dealing with SaaS, inexpensive office space, availability of talent and quality of living were the critical factors, while for larger companies, usually in the IaaS and PaaS spaces, physical infrastructure and tax incentives determined the go or no-go decision.

By Sourya Biswas

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