Tuesday, January 24, 2012

Can You Bet Your Business On A Cloud

Being active in the "cloud" community, the story about MegaUpload being shut down naturally caught my interest this morning. MegaUpload is one of these new breed of services which allow customers to store files for other customers to retrieve. You can think of it like a giant hard drive in the sky with specific areas or directories for your use. Many people had stored untold numbers of files there and those files are now inaccessible. This article poses the question are we prepared should the cloud services we use suddenly disappear one day. The defense "it won't happen to me" won't stand up in light of the events that have now taken place. This happened with no warning and there is no process for getting at your files.

Even more frightening, what if the cloud service is more than just storage. What if the NY Times headline tomorrow is Marc Benioff indicted - Federal investigators seize all assets. Does this mean your entire sales process will grind to a complete halt? How long could you function without this application and the information contained within?

Of course there are no easy answers to this question. The point of storing files in the cloud is to avoid the cost and complexity of managing the equipment and software necessary to store the files yourself in the first place. So making local copies as a backup seems contradictory. Engaging a second cloud service as alternate storage is likely to change the economics and erase the savings of going to the cloud in the first place. In the case of a SalesForce.com, replicating the application in house or having an alternate supplier of the service is equally difficult to imagine.

My advice is to discuss the risk mitigation in the same terms as any other critical element of your business. The solutions have to be viewed in terms of the true risk and value of the service. For example, you may be in manufacturing and have one key production facility. What is the plan should the building be rendered useless by natural disaster? Property insurance will help with the replacement while business interruption insurance will help you muddle through the down time. Do we have the proper financial risk mitigation strategy in place for our key outside service providers?

File storage is like a warehouse. If we lose physical inventory it can eventually be replaced through purchasing or manufacturing. But intellectual property is not the same. We may be forced to keep copies in alternative locations and view the cost as insurance. Rewriting all the code or reconstructing all the customer records may not be possible in real time.

What would you do if there was a fire at HQ and all of your accounting records were destroyed? Typically we use some off site backup strategy to mitigate this. In the same way, special agreements could be included with your cloud service provider. For example, each month a complete dump in a mutually acceptable format could be provided or deposited with an independent third party. Should the cloud vaporize, you could retrieve your files from the alternate.

Proper use of cloud services can save money, improve service, enable growth and provide many benefits if managed properly. There is no silver bullet. Each investment in a cloud strategy must be fully evaluated and adequate contingency plans devised before you make the switch.

IT people love to "blue sky" but it's not a good thing when your clouds disappear.

Captain Joe

Follow me on Twitter @JPuglisiLLC