Ten reasons why cloud is good for startups

1. Access to (initially) cheaper resources.
It is a fair to say that existing in-house equipment can be cheaper to run than online services, particularly if the former is already amortised. Equally, the costs of online services can prove more expensive in the longer-term when compared like-for-like with their in-house equivalents.

However the up-front cost is reduced – minimal hardware costs, and in general a spend-only-on-what-you-use model where you pay per user or per quantity of processing/storage. One way or another, this means that up-front costs can be far more tightly controlled than was possible with the traditional, buy-the-whole-stack model. And indeed, should startups really care whether the overall cost is going to be greater five years hence? What’s the world even going to look like in five years’ time?

2. Keeps options open.
Taking cloud computing back to its basics, it is about accessing services, application infrastructure, processing and storage from an online provider rather than having to do any of these things yourself. In other words, it offers a plethora of possibilities which can be tried and selected or rejected without significant outlay, and with a reduced risk (data migration aspects aside) of being stuck with the wrong answer. This is as true for software as a service applications as hosted hardware configurations – if your virtual architecture proves to be wrong, rip it down and build another.

3. Use of "elastic" resources.
Capacity planning is a challenge for any size and stage of company. New businesses don’t always have the luxury of spending on technology they don’t have use for. However, neither do they want to find themselves in a hole should they, perhaps quite suddenly, find that need for resources is outstripping supply. The number of people accessing the website for example, or the number of users of a given application, or the volume of data being shared, all can see demand spikes which need to be fulfilled quickly. Similarly, such demand may very quickly drop away, at which point the organisation does not want to be stuck with unused assets.

4. Less IT, fewer IT people.
IT people are great – but running in-house IT can be a distraction for smaller companies, particularly during the start-up phase when attention should be focused on getting the product out of the door, sales and marketing and so on. Each service that can be run online, is a service for which someone else can be managing hardware configurations, power management, backups and archiving, data migration to the latest version and so on.

5. Improved security.
This is a contentious point, and no doubt security experts can identify weaknesses in cloud-based models that can be mitigated by running equipment and processes in-house. Security is about risk management, and cloud computing has plenty of risks, as does in-house IT. These need to be understood before blindly choosing any online service. However when it comes to mitigations, many cloud providers have their own security expertise, have already implemented mechanisms to protect data and processes, and are proactively keeping an eye on new risks. If your startup is equally on top of such things, you deserve a gold star.

6. Mobility out of the box.
A spin-off benefit of running IT facilities online is that you can access such facilities from any suitably configured device. This makes questions around working at home, access from the road, use of personal equipment and so on much easier to answer, than if trying to access facilities from the server room in the office. It also works more closely with policy setting – that is, if you decide that certain data should not be stored in the cloud for privacy reasons, the chances are that you shouldn’t have access to it from generically configured mobile devices and home computers.

7. Faster access to IT enhancements.
As anyone who has made heavy investment in IT for a smaller company will know, keeping up with technology advances can be a major challenge. It may be, for example, that the moment your brand new server farm arrives on its pallets, the manufacture announces a new release with double the processor power for half the cost. Or equally, that promised software feature that you need to deliver services to your own customers has been delayed, yet again, with no explanation. The cloud model encourages access to up-to-date hardware resources and software functionality, with new features sometimes being added overnight at no extra cost.

8. Easier collaboration and partnering.
Many startups depend on flexible access to resources, using associates in marketing and sales, subcontracting design and development to freelancers, outsourcing manufacturing and so on. Software as a service models and online access make it far easier to provision interim resources with direct access to core systems, or sharing content using cloud-based storage, thus facilitating collaboration. Access can then be deallocated when they are no longer involved.

9. A layer for building on 
Many cloud computing services are available as a commodity resource which can be built upon – from hosted infrastructure and storage, to platform-as-a-service access to data management and application components. For technology startups this takes away much of the pain of building such capabilities from scratch. Indeed, while there will always be a need for low-level programmers, the door has been opened to building applications and services using interpreted and scripting languages making it easier to innovate and develop capabilities nobody has thought of yet.

10. Faster time to value 
Perhaps the single most important factor for any small business is its cash flow. Starting up a business inevitably requires investment – of time, resources and infrastructure – and the sooner a return can be delivered against this investment, sooner that the costs of the business can start to reduce and it can start to look towards profitability.

Without going into the economics of net present value and so on, the lower overheads and faster deployment times of cloud-based models mean that revenue-driving activities and services can go live more quickly, directly offsetting their costs. While this may not be the difference between success and failure, at the very least it will offset overheads and release resources that can reduce the overall risks of starting up.

So, is it just a case of "jump in, the water’s warm" for startups? While these benefits may be compelling, plentiful challenges and gotchas that startups should keep in mind, including data governance, interoperability, bandwidth issues, lock-in and so on; so much choice is a two edged sword.

We shall look at these issues in a future article – the bottom line will always be to maximise the value whilst minimising the risks in appropriate timescales, an equation that will be all too familiar for the battle-worn entrepreneur. All the same, for startup of all shapes and sizes anyway, cloud computing offers plenty to like.