Worried your cloud provider will go bust? Seven ways to protect your business

From the questions to ask to the contingency plans to put in place...
Written by Shelley Portet, Contributor

From the questions to ask to the contingency plans to put in place...

Organisations great and small are increasingly turning to cloud computing to lower IT costs, increase flexibility or boost efficiency. While cloud may make a company's IT infrastructure more agile, it also requires a leap of faith - putting vital data and systems into the hands of a third party rather than keeping them safe as part of inhouse IT.

Failed cloud

Follow these seven steps to protect your organisation from the the fallout of a failed cloud providerPhoto: Shutterstock

For some companies - particularly small and medium-sized enterprises - the effort and cost required in backing up data can seem like a waste given the relatively small chance of a provider losing their data, according to Richard Holway, chairman of analyst house TechMarketView.

"It's a bit like snow in the UK - it doesn't seem worth buying the snow ploughs," he told silicon.com.

But if companies fail to put procedures in place to protect themselves against the worst-case scenario, they could end up having to build their IT systems from scratch, or at a loss to replace vital data.

For those looking to move systems to the cloud, or for those who already have them in place, here are seven vital steps to make sure that even if the worst happens to your supplier, it needn't mean the worst for your business.

1. Check your provider is financially secure

Although it may seem like the obvious thing to do, many companies do not check up on the financial security of their cloud service provider before becoming a client.

"Before you give any contract of that nature, you must make sure the people you are going into business with are financially secure. You may say, 'Well, doesn't everyone do that?' but the fact of the matter is they don't," Holway said.

Before taking on a new cloud service provider, organisations should get references from existing customers and ask questions about their financial forecasts, Clive Longbottom, founder of analyst house Quocirca, told silicon.com.

"Ask about financial backing - VC, angel or a larger company with a financial interest. Ask about financial performance - when they expect to break even, how many funds will be used and so on."

This may not be an easy task. Longbottom said ascertaining the financial security of a service provider can be difficult when they are new to the game, which many providers will be - but it's a...

...useful gauge of a vendor's likely staying power.

2. Question your provider about their back-up procedures

Being financially secure does not completely safeguard a service provider from being brought down. Hacks, human error and natural disasters could also cause a cloud provider to fail, so customers should make sure to query a provider about the strength of their contingency plans.

"[SMEs] assume that everything is backed up, but is it all backed up on the same site? Do [the providers] have remote sites? How would they relocate to another site and how long would it take? How often are these procedures practiced?," said Quocirca's Longbottom.

Would-be cloud users should be asking such questions - and making sure they're comfortable with the answers - well before contracts are agreed.


Businesses should have their own server to back up data sent to the cloudPhoto: Shutterstock

3. Have an offsite back-up

In case a provider is unable to retrieve data from both their primary and back-up servers, organisations should have their own system of backing up data sent to the cloud.

This can either be done through another vendor, or as TechMarketView's Holway recommends, organisations can have their own off-site server.

"Every client should take an off-site back-up of what is on their cloud systems, and they should do it on a regular basis," Holway said.

"Hardly any cloud customers do that," he added.

4. Have agreement in place for migration

Should a provider fail, transferring data and systems to another supplier can be a long and complicated process.

Quocirca's Longbottom recommends organisations have "a clause in any agreement such that the provider has to provide help in migrating away should the need ever arise", which could speed up the migration process.

The service provider should agree that "they cannot hold things up through not making data or function available" so that organisations do not risk having their data withheld from them, he added.

5. Monitor the service provider

Once a service agreement is in place, organisations should continue to track the progress of their service provider. Don't assume that a vendor that was on solid ground when a contract was signed will remain so.

"Watch what the company does. If there is...

...a lack of ongoing investment, they will rapidly fall behind the curve, and new money will go to competitors," said Longbottom.

However, it is not just a lack of investment that customers should watch out for. Longbottom also cautioned that if there are a lot of changes at the service provider - management reshuffles or a large increase in customer numbers - "the expense will likely be high and so the company's burn rate of money could push it towards going bust".

Cloud computing

Businesses may want to employ another vendor to be on standby in case the primary provider failsPhoto: Shutterstock

6. Have a plan B ready to go

Organisations should have a carefully thought-out plan B so business as usual can be restored as quickly as possible to minimise the disruption to end users.

One option is to have a secondary provider ready to take over in the event the worst happens.

"This may not be a big cost, just the provider holding some images ready to be spun up if required and to be able to take data rapidly," he said.

The organisation also needs to consider how the business will operate while the migration to a new provider is taking place: "This may be as old-fashioned as using paper and pen," Longbottom added.

7. Consider reasons for going to the cloud

Finally, organisations should think carefully about their reasons for moving to the cloud as it could affect the kind of service provider they choose - and the likelihood of that provider disappearing.

"If you go to a provider because it is cheap, expect it to go bust," Longbottom warned.

"If you go to it because it does things in a manner that would be too complex for your own business to do inhouse and you are willing to pay for the value such an environment will bring, it will be less likely that the chosen partner will go bust."

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