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Wednesday, July 13, 2011

Startup Enablers: Cloud Computing

9:32 PM Posted by Deepak Nayal , No comments
This is the second post in the Startup Enablers series. In the first post, I briefly talked about some of the key enablers that have helped accelerate the growth of startups. While writing that article I realized that there is more I wanted to write about for each of the enablers, but doing so would have made that original post much lengthier. So I decided to cover each of those enablers in a separate post. This one is about cloud computing.

I am not going to explain cloud computing here; a lot has already been written and discussed on it. The purpose of this article is to share my views on how companies, especially startups, can leverage cloud computing. The reason I am emphasizing here on startups is that I believe they have been, and still are, the biggest disruptive force in any industry. This is particularly true in the technology sector. So while everything I am saying is applicable to all companies, both big and small, I think startups can leverage cloud computing a lot more than their big and established counterparts.

Companies can leverage cloud computing in two ways: operationally - when a company is using cloud computing for running its own operations - and product-wise - when a company is providing cloud based offering to its users.

Cloud For Operations
Before cloud computing was widely used, companies used to either buy server space from hosting companies or buy their own servers to host their applications. The key problem with the first approach was that the space assigned was limited and you could not scale up quickly based on the server load. Generally companies/people who were interested in just some kind of web presence (and not heavy processing) went for this option. The problem with the second approach was that you had to invest a lot of money upfront, with no guarantee that users are going to show up, and you could not scale up based on the increase in load. In addition to that, extra effort was required in maintaining and tuning those servers.

Cloud computing solved all these problems related to scalability, cost and effort. You do not need to buy servers upfront and can just use some resources on the cloud, and if more resources are required the "cloud environment" can scale up to accommodate that requirement. In addition to that, you are not required to maintain those servers. No resource commitment; you only pay based on you usage; technology capital expenses are converted to operational expenses - CEOs love it, CFOs not so much. It is an excellent solution for companies.

Though cloud computing has been around for many years now, it has caught public attention only in the last few. Primarily because various consumer side companies with massive data and processing requirements have adopted the cloud, strengthening its image. With companies such as Apple, Zynga, Foursquare, and Microsoft, backing up cloud computing by using it for their key operational use, other smaller businesses can easily trust it for their operational requirements. Companies can leverage it for setting infrastructure (Amazon EC2 and Microsoft Azure), developing applications (Heroku and PHPfog) and using services (Salesforce and Zendesk). Using cloud computing allows these companies, especially startups, to stay lean, and focus on their core offering. 

Cloud For Products
We have just talked about leveraging cloud for internal/operational purposes. Cloud can do wonders when leveraged for consumer offerings, as it provides great benefits to end users - mobility, ubiquity, scalability, pay as you go and safety against data loss. Cloud should not be confused by the web though, because anything that is on web is not necessarily a cloud service. The benefits constitute a major part of it, and in addition to it the architecture and pricing are also important aspects of a cloud offering. Having said that, I think companies should not worry about technicalities of cloud computing and its features, and should instead focus on providing solutions - cloud based or not - to their end users. 

I believe what we are seeing in cloud computing currently is just tip of the iceberg. Cloud will achieve its final purpose when we actually stop talking about it; when cloud computing becomes a given; an expected basic functionality. Currently, people think of clouds as servers, applications, websites, and interfaces. Thanks to advancements in local, social, mobile and big data technologies, hopefully we are not too far away from witnessing a future with ever-present, omnipresent, intelligent systems. That is when a cloud service will not be just a website or an application, but a service that can be accessed anywhere, anytime and using any device, just like electricity. 

I think startups will lead the way in innovation here, with the established companies following them. Dropbox is a particularly interesting example here, with Apple following [and enhancing] on its footsteps with iCloud. Overall, cloud computing is here to stay. And hopefully, though the cloud computing concept will become main stream (and as common as a desktop PC), the term cloud computing will drop off the lexicon.

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