SHARE



ABOUT THE AUTHOR


Gary Audin
Gary Audin is the President of Delphi, Inc. He has more than 40 years of computer, communications and security...
Read Full Bio >>
SHARE



Gary Audin | November 18, 2011 |

 
   

The Cloud Begets Startups

The Cloud Begets Startups The cloud allows many startups to begin with little capital. This is both positive and negative for the enterprises that want to do business with the startups.

The cloud allows many startups to begin with little capital. This is both positive and negative for the enterprises that want to do business with the startups.

We hear about cloud services companies coming to the market in droves. But have you also noted that the cloud allows many other forms of startups to begin business with little capital? This is both positive and negative for the enterprises that want to engage the startups in a business relationship.

This is the focus of "How Cloud Computing is Fueling the Next Startup Boom" by Joe McKendrick of Forbes. The article points out: "I'm not just referring to companies that are offering cloud services--rather, companies of all types can now be created and supported. I’m talking about law firms, travel services, insurance brokerages, scientific ventures, entertainment sites and just about everything you can imagine. I’m also talking about groups or departments within existing large organizations, as well as individuals working out of home offices."

The Positive Points
Companies want to be in business and make a profit. Starting any company requires some capital, enough capital until the profits roll in. The very low cost of entry for cloud services can reduce the capital needed for the startup. Cloud services can cost pennies to about $2.50 per hour of service time. Anyone can set up an account.

The other positive points are:

* The startup can gain access to cloud services for about the cost of one employee working at the startup.
* Startups can stretch their investment dollars much longer when the IT service costs are low.
* New ideas that may not fly with big enterprises can be implemented quickly and cost effectively through cloud services.
* There is no significant geographic limitation for the startup location. Truly the garage will do.
* It will take two to three years for the cloud service costs to approach on-site IT costs. Only then will the startup have to plan for more capital for internal IT systems and staff.
* The startup can focus on their core competency, not on IT.

The Negative Possibilities
As with any venture, there are possibilities for negative conditions to abound. One of the frightening outcomes is the easy entry of criminals using the cloud for their purposes. I mentioned this in my recent blog “Crime Comes to the Cloud” http://www.nojitter.com/post/231901931/crime-comes-to-the-cloud. If the FBI or other law enforcement group wants to investigate criminal activities at a cloud service, they may not be able to pinpoint the exact servers to analyze. The law enforcement group may confiscate many servers, including those of reputable and legal organizations, putting them out of business. I pointed out some of these issues in my article "The Legal Side of the Cloud: Worrisome?".

The cloud based startups and their customers can also experience these negative aspects:

* The commonly required business plans for attaining venture capital do not need to be written. Ill-considered startup ventures are more likely than when venture capital is not required.
* Since the startup requires less IT staff, the startup will depend on fewer individuals for delivering products or services. There will be little depth in staff. This makes the startup vulnerable to staff changes.
* Cloud failure means startup failure. Consider the two Amazon EC2 failures as an example. EC2 goes down; so does the startup, especially if the startup is using EC2 to deliver the service to the customer. See my blog "Cloud Collapse"
* Cloud security is a constant theme in many articles and blogs. Startup security depends on cloud security. If the startup customer has a security problem, the startup may not be able to handle the issue. The solution may be limited by the cloud service agreement, to the detriment of the customer.
* There is danger to the enterprise from internal departments and subsidiaries. These can now go off on their own to gain IT services beyond the control of the enterprise management. Eventually IT will have to spend time and effort to regain control of the cloud-based IT services that they did not know about.
* Internal departments and subsidiaries can potentially also not comply with regulations and legislation. I know of one case where a hospital clinic was using a cloud based video service without complying with HIPAA requirements. The CIO only found out by accident and became livid upon this discovery.
* Since it is so easy and low cost to start a business using cloud services, criminals can create what appear to be legitimate services that are really a scam, without the customer having a clue.

Check into the financial health of the startup. Review the startup's agreements with cloud service companies to see how well the enterprise is protected. Consider a backup for the possibility of a cloud service failure and/or security problem.





COMMENTS



Enterprise Connect Orlando 2018
March 12-15 | Orlando, FL

Connect with the Entire Enterprise Communications & Collaboration Ecosystem


Stay Up-to-Date: Hear industry visionaries in Keynotes and General Sessions delivering the latest insight on UC, mobility, collaboration and cloud

Grow Your Network: Connect with the largest gathering of enterprise IT and business leaders and influencers

Learn From Industry Leaders: Attend a full range of Conference Sessions, Free Programs and Special Events

Evaluate All Your Options: Engage with 190+ of the leading equipment, software and service providers

Have Fun! Mingle with sponsors, exhibitors, attendees, guest speakers and industry players during evening receptions

Register now with code NOJITTEREB to save $200 Off Advance Rates or get a FREE Expo Pass!

November 1, 2017

Your customers (internal and external) demand that you offer them the ability to connect by any means. With the adoption of cloud communications tools you now have access to an expanded portfolio o

October 18, 2017

Microsofts recent Ignite event had some critically important announcements for enterprise communications. Namely, Microsofts new Team Collaboration offering, Teams, will be its primary communicatio

September 20, 2017

Customer experience can make or break your business. But how do you achieve outstanding customer service when you're dealing with outdated organizational structure, lagging technology, dated proces

September 22, 2017
In this podcast, we explore the future of work with Robert Brown, AVP of the Cognizant Center for the Future of Work, who helps us answer the question, "What do we do when machines do everything?"
September 8, 2017
Greg Collins, a technology analyst and strategist with Exact Ventures, delivers a status report on 5G implementation plans and tells enterprises why they shouldn't wait to move ahead on potential use ....
August 25, 2017
Find out what business considerations are driving the SIP trunking market today, and learn a bit about how satisfied enterprises are with their providers. We talk with John Malone, president of The Ea....
August 16, 2017
World Vision U.S. is finding lots of goodness in RingCentral's cloud communications service, but as Randy Boyd, infrastructure architect at the global humanitarian nonprofit, tells us, he and his team....
August 11, 2017
Alicia Gee, director of unified communications at Sutter Physician Services, oversees the technical team supporting a 1,000-agent contact center running on Genesys PureConnect. She catches us up on th....
August 4, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, has lately been working on integrating enterprise communications into Internet of Things ecosystems. He shares examples and off....
July 27, 2017
Industry watcher Elka Popova, a Frost & Sullivan program director, shares her perspective on this acquisition, discussing Mitel's market positioning, why the move makes sense, and more.
July 14, 2017
Lantre Barr, founder and CEO of Blacc Spot Media, urges any enterprise that's been on the fence about integrating real-time communications into business workflows to jump off and get started. Tune and....
June 28, 2017
Communications expert Tsahi Levent-Levi, author of the popular BlogGeek.me blog, keeps a running tally and comprehensive overview of communications platform-as-a-service offerings in his "Choosing a W....
June 9, 2017
If you think telecom expense management applies to nothing more than business phone lines, think again. Hyoun Park, founder and principal investigator with technology advisory Amalgam Insights, tells ....
June 2, 2017
Enterprises strategizing on mobility today, including for internal collaboration, don't have the luxury of learning as they go. Tony Rizzo, enterprise mobility specialist with Blue Hill Research, expl....
May 24, 2017
Mark Winther, head of IDC's global telecom consulting practice, gives us his take on how CPaaS providers evolve beyond the basic building blocks and address maturing enterprise needs.
May 18, 2017
Diane Myers, senior research director at IHS Markit, walks us through her 2017 UC-as-a-service report... and shares what might be to come in 2018.
April 28, 2017
Change isn't easy, but it is necessary. Tune in for advice and perspective from Zeus Kerravala, co-author of a "Digital Transformation for Dummies" special edition.
April 20, 2017
Robin Gareiss, president of Nemertes Research, shares insight gleaned from the firm's 12th annual UCC Total Cost of Operations study.
March 23, 2017
Tim Banting, of Current Analysis, gives us a peek into what the next three years will bring in advance of his Enterprise Connect session exploring the question: Will there be a new model for enterpris....
March 15, 2017
Andrew Prokop, communications evangelist with Arrow Systems Integration, discusses the evolving role of the all-important session border controller.
March 9, 2017
Organizer Alan Quayle gives us the lowdown on programmable communications and all you need to know about participating in this pre-Enterprise Connect hackathon.
March 3, 2017
From protecting against new vulnerabilities to keeping security assessments up to date, security consultant Mark Collier shares tips on how best to protect your UC systems.
February 24, 2017
UC analyst Blair Pleasant sorts through the myriad cloud architectural models underlying UCaaS and CCaaS offerings, and explains why knowing the differences matter.
February 17, 2017
From the most basics of basics to the hidden gotchas, UC consultant Melissa Swartz helps demystify the complex world of SIP trunking.
February 7, 2017
UC&C consultant Kevin Kieller, a partner at enableUC, shares pointers for making the right architectural choices for your Skype for Business deployment.
February 1, 2017
Elka Popova, a Frost & Sullivan program director, shares a status report on the UCaaS market today and offers her perspective on what large enterprises need before committing to UC in the cloud.
January 26, 2017
Andrew Davis, co-founder of Wainhouse Research and chair of the Video track at Enterprise Connect 2017, sorts through the myriad cloud video service options and shares how to tell if your choice is en....
January 23, 2017
Sheila McGee-Smith, Contact Center/Customer Experience track chair for Enterprise Connect 2017, tells us what we need to know about the role cloud software is playing in contact centers today.