How the cloud can put you out of business

How the cloud can put you out of business

Summary: You've elected to move a business critical service to the cloud. How sure are you that the service vendor will still be there when you need them?


With a focus on large scale business enterprises, it easy to lose sight of the fact that while the cloud back-end technologies are the domain of the IT professional, in many cases, the SMB target market for the cloud doesn't have anywhere near that level of IT expertise available. In fact, that's what makes the SMB market the sweet spot for cloud applications. There are a huge number of businesses in the $5-50 million dollar a year revenue category that get by with minimal IT support and who are the perfect market for the cloud service provider, who is taking some of that IT responsibility upon themselves.

But what happens to your business when you start to move critical services offsite to a service provider? A failure on their end may have a cascading effect on your business. And while the provider may have the redundancy and resources to recover from that failure, how about you? 

I've been hearing lots of anecdotal stories about failures ranging from credit card transation processing services mysteriously disappearing to completely lost service accounts, but I've found little hard information about how business are handling the potential damage that a failure with your cloud service provider can cause.

Personally, I have experience with two situations that still make me shudder, one that happened to me directly and one to a client. The personal experience dealt with hosted email; the granddaddy of cloud based services. In this situation I had moved my business from a self-hosted email solution to a hosted Exchange service. About two years into the service, while upgrading systems, a number of email accounts suddenly had no email in them; the users carefully organized email inboxes were now empty, and all of the information in those emails was gone.

It took a lot of phone calls and the power of the press to eventually figure out what had happened and restore the data, though in the initial contact with the lead vendor's tech support they were happy to offer the solution of restoring each of the missing mailboxes for $500 per mailbox, despite the fact that the mailboxes disappeared while following their directions for the upgrade/migration. A lot of digging eventually led me to the fact that my service provider was a reseller for another vendor's email hosting services, and through further investigation I determined that my vendor had elected not to use the actual provider's first tier support services, which meant that the tech's I had been dealing with knew less about Exchange Server than I did and where simply reading rote responses from their manual in response to my questions.

Had I not had the resources available to me that I do, along with a detailed knowledge of Exchange, I would have been like any other customer, left with no recourse but to pay thousands of dollars to fix something that I was able to eventually prove was caused by the reseller's actions.

But at least I knew that I was completely relying on someone else's servers when I contracted for a hosted Exchange Solution.  To new users of cloud services, it might not be quite this obvious.  Which brings me to the second situation I have personal involvement in; one which is still being resolved.

In this case a client of mine had completely replaced their accounting systems about 18 months ago. I was not directly involved in this project as I make no claims to have any accounting expertise. This business is a classic SMB; about $20 million in yearly revenue, less than 20 employees and a single person IT staff. They were in a position where they absolutely had to upgrade their internal accounting system, as it was old, specialized, and completely outgrown. 

So with the assistance of the consultant who supported their existing accounting system, they migrated to his recommended product, a well-known small business accounting system, with a vendor recommended third-party add-on designed for their type of business. What no one seemed to realize was that the third-party add-on was basically a cloud service; its functionality was dependent upon synchronization with the vendor cloud service.

So in January, when the third-party vendor unexpectedly shut their doors and closed down their cloud servers, their accounting application just stopped working.  This left them with, among other things, no way to manage inventory, generate invoices, or calculate their salesmen's commissions. They were dead in the water.

The only good side of this was that January is generally a slow month, so they actually went to manually doing all of their accounting and inventory tasks while they selected a new product and had their accounting consultant do the change-over and new product training.

Their takeaway from this whole fiasco was far different than mine; while they were basically unaware that they were using a cloud service as part of the software they had purchased, they didn't seem to care. Had the cloud component not existed, they wouldn't have had the same problem; when the vendor went out of business they could simply have made an orderly migration to a new product when necessary.

Their new software, from a single, first-tier SMB accounting software vendor, has a similar component; it too synchronizes data with the vendor's cloud servers. This factor was not part of their purchase decision process despite the problem the same type of service had previously caused. Their accounting consultant was simply concerned with getting them up and running with a better solution than he had picked the last time.

From my own research I've found that in this case, a loss of connection to the cloud service will not stop the application from working properly, which is a major improvement (though an unintentional one) and I have suggested that they add a backup component to their accounting data that isn't dependent on that same vendor. But I get the definite impression that they feel my concerns are a bit overstated.

The choice, of course, is theirs, but it does beg the question. I might choose to bet my business future on a cloud provider, but if it's up to me, there had better be a very effective plan B in place.

Topics: Banking, Collaboration, Enterprise Software

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  • Very informative

    We've had an in-house cloud solution in place sinec 2003. Yes we have had the same minor issues that other's in-house or outsourced solutions encountered, but in the end the data is right where we need it, no matter what happens and for what reasons, [b][i]we[/i][/b] hold the data, and can access it various ways thru the back-end.

    Sure you're going to get the die-hard Google fanboys here proclaiming that Google is too large, and too smart to let that happen, but that's not true by any stretch of the imagination.

    If you don't hold your data, you really have no real control of it. I have no idea who handles tech support for Google, but we do know who does at our company.
    • Wise move.....

      @AllKnowingAllSeeing<br><br>as long as your own system is adequately safeguarded and backed up.<br><br>Ideally I see a hosted cloud environment where you "host" the backup in-house. Having your data hosted by a provider in the cloud allows easier and more reliable access perhaps, as well as reducing your own redundancy and backup requirements. You will also then never be wholly dependent on a service provider for the future of your business.
      • RE: How the cloud can put you out of business

        @Economister That's how I see the most effective and intelligent way to deploy cloud applications. It's all about having a disaster plan, and mitigating the effects of disaster through effective backup... The cloud doesn't change that, it actually complicates that fact in some ways.
      • RE: How the cloud can put you out of business

        @Economister So thank you anyway~~! ^^ <a href="">imitation hermes bags</a> <a href="">hermes replica</a>
    • I agree and disagree with you


      Any company using cloud services still needs in-house IT staff to make decisions in the best interest of the company. This would include understanding what to expect during a disaster situation, and testing to make sure systems are recoverable. In other words, you still need process, you still need best practices, you still need technical people with a vested interest in your company to be overlooking the total solution. So, in that regard, I generally agree with your premise.

      Where I disagree with you is your seeming total rejection of externally-hosted cloud services per se. For example, using multiple cloud vendors to replicate Exchange data between hosted services could have prevented the outage described. You can use multiple vendors with a solution that puts you in the middle. In that way, the data can living externally and/or internally and you still have control.

      The big takeaway for me is don't shop for cloud services on price. If IT is mission critical for you, find your vendor the same way you would look for a heart surgeon. You don't go with the guy with a coupon in the Sunday paper. In fact, cost savings is not the most compelling reason to move to cloud services.

      The thing with Google is they will have better uptime than your shop will. So, you have to know what they are offering in terms of service, what you can reasonably expect them to do in a failure, and what you need to do as the IT guy to make sure that if Google fails, the company doesn't.

      (Keep in mind, this real world advice will conflict with what your CEO read in a magazine somewhere about "the cloud", so this will inevitably lead to some work setting expectations.)
  • RE: How the cloud can put you out of business

    It looks safe to place ur data or apps with the big boys of the cloud, but again, even if they declared 99.9% uptime, there's still 0.01% downtime due to unforeseen circumstances, it's will be harder to escalate the matter. The smaller cloud providers look established with their web, all u know, there's no HA and it is running in data center with water sprinkles.
  • Cloud Use for Performance Testing

    Agree that SMB's are a perfect market for the cloud service provider although careful selection of vendors is paramount. This need opens the door for expert advice from Cloud consultants since the SMB may not have in house the expertise to make the correct choice. A growth market indeed. One thing I haven't seen too much written about in cloud use is for full production testing, capacity and performance checks on a cloud and then for production to run in house. This may be more a model for large companies but SMB's also.
    • Correct

      The article could have covered the failures in the SME IT without using the cloud, ie the exchange mailboxes would never have been recovered, downtime high.

      Choose your suppliers wisely, ensure data is regulary backed up at an independent location and use technologies made for this type of scalability (ie unix).
      Richard Flude
  • RE: How the cloud can put you out of business

    I'm an vertical ISV. We often get requests from end users and other companies to integrate our vertical program. Here is what I ask before spending further time on it.
    1. I want a copy of the contract that end users sign with this third party. Almost none provide a way for a company with a problem to get it fixed. Most contracts specify that the only way to get relief is in civil court in state X, and most contracts include a clause prohibiting injunctive relief. Most contracts says something like "we protect your data like it is our data" or similar bull. If the cloud company does not contractually obligate themselves to make the end user whole, I'm gone.
    2. If the contract is acceptable the next question is whether or not they will provide the offered service in the current form for a certain period ( at least a couple of years) and provide adequate notice (6 months or so) of format changes to allow us to schedule, modify, test, and distribute changes on our end ahead of the switch over. You don't even want to get into my horror stories that caused me to make this a hard position.

    My experience is that large tech companies (HP, Microsoft, , Intuit) are good partners and that companies in our vertical are terrible partners, including the multinationals.
  • RE: How the cloud can put you out of business

    The long and short of this is, as always when outsourcing your infrastructure:

    1. Be careful about what's in your contract and SLA. Make sure there are clauses that guarantee a certain level of service (99% uptime? Data retention).
    2. Regardless of #1 look out for your own data. Back your data up to an offsite location on a regular basis, do NOT rely solely on one company. If you have some EC2 nodes, frequent snapshots are a must, but are still not enough to ensure that you will keep your data. This has always been something that you should be worried about, this hasn't changed with the cloud, it's just more idiots have forgotten about it. The smart business decision is to always hedge your bets, in this case, buying an EMC backup solution and copying off the data frequently would be a great way to do so.
    3. Have a failure plan with specific steps that you will take in the event that you lose a few nodes. How quickly will you be able to restore service, what will you do if the data is gone, what will you do if you can't use the same provider? Knowing the answers to these questions in advance will save you a lot of time and frustration when something actually happens.
    4. Work with one of the bigger names. I work mostly with Amazon EC2 for my outsourced cloud computing needs. The bigger names are more apt to have done everything right and have probably ironed out a lot of your potential issues. This doesn't guarantee you against failure, but it may make it more unlikely, and it may mean that the service you get in case of failure will be better. It also means that the company providing your infrastructure is less likely to disappear in the long term.
  • &quot;Beg the question&quot;

    No, it doesn't.
    x I'm tc
    • RE: How the cloud can put you out of business


      Actually it does; they are presuming that switching to a service with a similar sync process will not cause them similar problems, without verifying that condition. They have no evidence to support that belief.
      David Chernicoff
      • That's still not begging the question.

        @David Chernicoff

        Begging the question doesn't mean believing an unverified thing to be true. It means that a logical argument has been made in which the conclusion is inherent in the premises.

        "Cloud services are reliable because they never fail" is begging the question.
  • No clouds please!

    I need full control of my data and I cannot take the risk of putting it on the cloud. That's why I use B-Folders on multiple computers and devices and sync between them WITHOUT ANY CLOUDS -
    • No internet, no access to your data

      @olafohman Security is the reason #1, reason #2, when the internet is down ... your entire company is down.

      All it will take to wipe out a company is an idiot with a sledge hammer drilling the main cable access near your building or near the main hosting server. Or worst, Comcast/L3 cutting access to your service provider (internet or cloud).
  • RE: How the cloud can put you out of business

    We attempted to migrate to Google Apps for our email, but there were major problems and one that you could pick up the phone and call when things went wrong (no matter what pricing level you are at). We currently have our email hosted in the cloud, but it is not very efficient (speeds are too slow), so we are moving it to an in house server. The cloud could work for some people, but really, as others are saying, we need control over our data and need to be able to access it 100% of the time, not 99.99% of the time.
    • RE: How the cloud can put you out of business

      100% it's a figure that does not exist in our industry. In my company we use Microsoft Exchange and it is unavailble a few hours per year, probably more than my private gmail.
  • RE: How the cloud can put you out of business

    Better yet demand a "cloud" based solution with a locally managed redundant "private" cloud.

    And demand that both clouds provide hourly roll back capability for 3 days and daily roll back for an additional 14 days.

    If you are not watching your data close enough to recover in those windows then the cloud is definitely not your problem!

    Essentially the local "private cloud" is a fixed performance version of the dynamic performance version in the cloud.

    But that does not mean you have local hardware. that can be handled via "dynamically" allocated VM's that are only used to maintain synchronization and or provide the service when the "cloud" version is overwhelmed or otherwise unavailable.

    That added cost of a high availability, low utilization, virtual private cloud is not significant in a normal sized deployment.

    But the peace of mind and local remediation capabilities are very significant to organizations that expect miracles on demand from mere mortals.

    Tom Hanan
    If you can't keep it real
    don't do the deal!
  • RE: How the cloud can put you out of business

    To be honest I would never be foolish enough to trust vital data to the cloud. When your data is stored at another location, you have no control over who has access to it. Human beings are not infallible, nor are they 100% trustworthy. A low level tech at the hosting company could be bribed to allow access to your data (thin of a competitor doing this), thus gaining insight on your company?s next strategic move. If you thought the iPhone 4 debacle was bad, think of how much worse trusting your company?s data to strangers is.
    • Why would you choose a cloud vendor ...


      ... who gives low level techs access to your data? You need to vigorously interview your vendors to get very specific information about security process and procedures, data encryption, physical access and logical root access to servers, etc. You don't just read the feature list and then click the "Checkout" button on the website.