Cloud Computing and Start-ups

September 19th, 2010

Like many things related to the internet Cloud Computing is just one of the latest terms that is being used in an attempt to put a tag on technology and services that have existed for some time. It certainly is the latest rage, including job postings searching for ‘Cloud Computing Experts’.

Yet, according to Wikipedia, there is controversy surrounding the term. During a video interview, Forrester Research VP Frank Gillett expressed criticism about the nature of and motivations behind the push for cloud computing. He describes what he calls “cloud washing” in the industry whereby companies relabel their products as cloud computing resulting in a lot of marketing innovation on top of real innovation. The result is a lot of overblown hype surrounding cloud computing. Richard Stallman, who launched the GNU Project, has said that cloud computing was simply a trap aimed at forcing more people to buy into locked, proprietary systems that would cost them more and more over time.

Nonetheless, the term is here to stay and like many things related to the internet it is a term that means different things to different people (think Web 2.0 for an example).

While nearly everyone can agree that ‘cloud’ is a metaphor for the internet, the differences begin when the term ‘computing’ is added. Therefore, definitions range from any computing that is available on the internet (cloud) including any Software as a Service (SaaS) or pay-for-use service to merely the use of virtual servers. Very simply, and broadly cloud-computing can mean – ‘The use of the internet to provide technology based services.’

With regard to a start-up, cloud-computing can be thought of from the perspective of being a provider of technology related internet based services that can provide those services cheaper (not just from a financial perspective), more rapidly, more reliably and with greater features and functionality (better) than can be done with the start-up’s own resources and schedule.

Yet, some key questions need to answer when a start-up considers using cloud-computing services:

  • What cloud-based services are available that are needed to develop, support and grow the business?

  • What factors should a start-up consider in making the decision to use cloud-based services?

  • Are cloud-based services cheaper, more reliable and more feature and function rich and better able to support the needs of the start-up than any other solution?

Let’s start today with a very general, high-level overview of some of the services that can be delivered via the ‘Cloud’:

  • Infrastructure (IaaS)

  • This is a model in which an organization outsources the equipment used to support operations, including storage, hardware, servers, bandwidth and networking components. The service provider owns the equipment and is responsible for housing, running and maintaining it. The client typically pays on a per-use basis.

  • Software as a Service (Saas)

  • This is a software distribution model in which applications are hosted by a vendor or service provider and are made available to customers over the Internet. Examples of this are Salesforce.com and MS Exchange hosting.

  • Web services

  • This is closely related to SaaS. Web service providers offer APIs that enable developers to exploit functionality over the Internet, rather than delivering full-blown applications. Examples include interfaces to job boards, ADP and UPS among many others.

  • Managed service providers

  • This is one of the oldest forms of cloud computing. A managed service is basically an application exposed to IT rather than to end-users, such as a virus scanning service for e-mail or an application monitoring service. Examples include Mercury for system monitoring and Postini for anti-spam monitoring.

  • Platform (PaaS)

  • This is a way to rent hardware, operating systems, storage and network capacity over the Internet. This model allows a customer to rent virtualized servers and associated services for running existing applications or developing and testing new ones.

In essence, there is a wide range of services and providers, essentially many isolated ‘clouds’ which a start-up needs to evaluate, select and plug into individually. While there can be immense advantages to a lean, quick moving start-up there is also the potential where bad choices can cause serious harm to the business. I’ll discuss some of these decisions and issues next.