Startups find the public cloud value sweet spot

Public cloud may seem like a great way to get your startup off the ground for minimal upfront IT costs, but don't jump in blindly.

You've got a great idea for a product and you're ready to launch it into the world. What's the best way to create the IT infrastructure that will allow you to get it out there quickly and cheaply? Contemporary wisdom says cloud computing is the way to go -- but before you go forth blindly, take a moment to assess your business needs to see if you can find public cloud value and how and if cloud will benefit you.

Startup ventures eager to get their businesses off the ground often find that using public cloud allows them to basically rent the infrastructure they need to get the business going quickly.

"The sign-on and pay-as-you-go model certainly has very attractive offerings," said Christian Hestermann, research director at Gartner Inc.

It's about less investment, less trouble. Those costs don't go away, but are evenly distributed, which is certainly attractive with startup companies who don't know what the future holds.

Christian Hestermann,
Gartner

Public cloud may attract bootstrapped startups because of its low initial costs -- companies don't have to buy servers and other equipment or hire IT experts, and they can use as much or as little capacity as needed. But Hestermann says the benefits go beyond that.

Small businesses may turn to the cloud for support with Web hosting, customer relations management and enterprise resource planning, he added.

"It's about less investment, less trouble. Those costs don't go away, but are evenly distributed, which is certainly attractive with startup companies who don't know what the future holds," he said.

But just how big does a business have to be for those economies of scale to pay off?

A bit bigger is the answer for Julie Stallman, co-owner of Love All Tennis, a small retail shop in Cary, N.C. With a brick-and-mortar location as well as an online store, Stallman finds that most of her needs are met with programs stored on her own computer or on the store's.

Although retail shops and restaurants without dedicated data centers may venture into public cloud, more technologically savvy companies are generally more aggressive with using cloud because they don't want a long-term engagement, said Eric Diamond, founder and chief strategist at Tribeca Digital, an interactive agency based in New York, N.Y.

"Cloud-based services allow for autoscaling," he said. As new businesses develop their products and services, the goal is to get them to market quickly. "Done is better than perfect," he said.

Eric Boggs has worked at several startups, so when he launched his newest venture, Rev Boss, an SaaS customer acquisition firm, in early 2014, he didn't think twice about putting 100% of his business processes in the public cloud.

"I can't think of a single small company that is not using cloud computing," he said. "Technology like Amazon Web Services makes it so easy. It's on-demand instantly."

Boggs uses cloud for data storage, processing and email notification.

"When you're trying to grow quickly, cloud computing accelerates the process," he said.

Too big for public cloud value?

Boggs also acknowledges that as businesses continue to grow, some find that the scalability benefits of cloud computing no longer outweigh the cost.

As Moz, an inbound marketing software company that used Amazon Web Services (AWS), grew, it found it more economical to build a private cloud. In a 2013 year-end company blog post, Moz chief executive officer Sarah Bird explained that, as the company grew and used more data, public cloud services became so expensive. The company built its data centers to host an on-premises private cloud.

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"When you do get to a certain size, it may make sense to put all or a piece in a proprietary stack," Bird said.

Some businesses, due to regulatory, legal or privacy concerns, also cherry-pick -- keeping some information on-premises while using public cloud for handling less sensitive material.

But for small, growing businesses, there appears to be a size sweet spot where public cloud can enhance a company's development. Owners of the smaller, non-tech-focused companies, such as Stallman's, may be inclined to venture in slowly. But, cloud computing believers like Boggs find that access to SaaS apps like Square Up for mobile payment processing or Shopify for e-commerce offer endless opportunities for even the smallest new business.

About the author:
Pamela DeLoatch is a freelance writer in the B2B and technology environments. She has written articles, profiles and case studies for numerous organizations.

This was first published in April 2014

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