Your cloud provider running out of business – Are you prepared for it?

Posted by Paul Anderson

Your cloud provider running out of business – Are you prepared for it?

There are no two ways about the fact that cloud computing is one of the greatest advances in IT. Despite of the fear and uncertainty that a few experts have expressed about it, the benefits offered by cloud are simply too large to ignore. It has been the effectiveness of cloud computing technology, that enterprises (who have made the move) have become more agile and have optimized their infrastructure costs, within no time. 

Since the advent of cloud technology, there has been formation of two different camps – cloud proponents and cloud opponents. While cloud proponents have always argued that a lot of the concerns that surround the cloud are baseless – the fact remains that a few of them do hold a fraction of reality. 

In a recent blog published in the Forbes website, there has been a discussion over one of these truth-holding cloud concerns. What if the cloud provider goes out of business? 

According to a section of experts, planning to opt for a virtualized setup is a wise business move. However, this should not mean that the business entrepreneurs execute the switchover without considering a few factors such as disaster planning (which ideally needs to be discussed in more detail). 

Background to the problem 

In the cloud technology, we do not own anything. Do we? The idea of using cloud is to rent the resources for a particular time frame. As business entrepreneurs, it doesn’t matter to us if these resources are storage space, databases or even virtual machines, and software. As long as they are available for as long as we are paying for them, we ignore other aspects of cloud technology. 

Now let’s suppose, for any unspecified reasons, our cloud provider goes out of business. Consequence – We will lose our server capacity and data. To be honest, thinking about the job assurance of the cloud provider is not a strange question. If you interact with the large corporations, you will be surprised that most of them hold this factor as #1 priority when migrating to a virtualized set up. 

Elaborating further on this context, the CFO of a leading IT firm has stated – ‘’the cloud is still a growing market.  Plenty of new entrants and small players have ventured into cloud based software development. With the stiff competition prevalent, it’s only natural that some of these small companies disappear either by being purchased by others, or simply by going out of business. Consequently, it becomes imperative for every enterprise to ensure that it deals with a cloud provider having a promising reliable future. ‘’ 

Interestingly enough, this problem has not been new. Instances can be cited where organizations whose systems have been deeply integrated with the cloud storage provider have suffered.  In this age of rich APIs and automation, (when the provider has shut down) it has been close to impossible to migrate the data, in spite of the grace period available to the organization. 

What is the solution? 

Some organizations have come up with the suggestion – staying away from the cloud. But then does following this approach makes sense? When we all know the exponential benefits that an organization gets out of using cloud computing technology, staying away from it can be a big blunder. 

The real solution to this problem is diligence and risk management.  As the experts put it, ideally it should be the job of the IT department to perform diligence on prospective vendors. They should be involved in the decision-making process to properly vet the providers. 

Among the several parameters to examine, understanding the business model holds the maximum importance. Questions that an IT team should discuss are – 

·         Is the cloud provider sustainable? 

·         Is their long-term plan compatible with the companies’ needs? 

Answering these questions will help the organizations to partner with the right cloud provider. 

Additionally, the IT teams can also develop contingency plans to handle possible disaster situations such as if the cloud provider goes offline.  The better the IT prepares and plans for these scenarios, the smaller the impact will be of the cloud provider going out of business.