Balancing The Playing Field For Startups
According to a Goldman Sachs report, cloud infrastructure and platform spending could reach $43 billion by 2018, which is up $16 billion from last year, representing a growth of around 30% from 2013 said the analyst.
This phenomenal growth is laying the foundation for a new breed of startup entrepreneur, which is clearly reaping the benefits of cloud computing.
“First and foremost, startups that offer software or online services have to prove their business model works in the cloud before they are likely to get any venture capital funding these days,” said James Staten, vice president and principal analyst at Forrester Research. “That means their business starts in the cloud.”
Cloud computing in many ways allows startups to compete with bigger more established companies, it gives them a level playing field in terms of IT infrastructure and gets them up and running in a fraction of the time that it would take a traditional brick and mortar business.
Another clear advantage of cloud computing is mobility, employing talent from around the globe, these employees can work from home using their own devices, there is no need to spend six figures on expensive IT equipment including servers, front end equipment as well as licenses, again representing huge savings on startup costs which can also seem attractive to potential investors.
With the big leaders in the cloud computing industry like Amazon Web Services and Microsoft Azure offering attractive solutions, startups now no longer need to spend capital on a centralised IT department or the range of IT staff that this normally entails.
In Gartner's Magic Quadrant for Cloud Infrastructure they cite AWS as the dominant industry heavyweight with Microsoft’s Azure a clear second. “there's Amazon, and then there's everyone else”, the report goes on to say “AWS has a diverse customer base and the broadest range of use cases, including enterprise and mission-critical applications. It is the overwhelming market share leader, with over 10 times more cloud IaaS compute capacity in use than the aggregate total of the other 14 providers in this Magic Quadrant”.
However industry experts are warning startups to tread carefully and consider their options, as cloud computing also has its downsides.
Outages can happen and big companies like Google are not immune, as we seen recently when their Gmail service went down, denying access to as many as 5% all internet users.
Microsoft’s Azure has also been prone to these outages, something which customers are increasingly expressing concern about.
Also Service Level Agreements (SLA’s), need to be scrutinised as the vast majority don't offer any real substance or guarantee.
Turning The Corner
Looking towards the future, many startups that become stable and profitable tend to move away from third party cloud computing options and begin to develop their own in house solutions as well as offering these solutions to other companies to increase profits and business further.
For aspiring startups choosing to go down the route of cloud computing, you can read the informative article entitled “Cloud Computing Checklist For Startups”.
(Infographic Source: NFIB)
In closing there is a vast number of advantages for startups who want to trim costs and jump on board this booming billion dollar cloud computing industry, however consider all of your options thoroughly before taking that giant leap.
By David Doyle