Unlocking the Power of Cloud for Startups: Benefits and Risks to Consider

Unlocking the Power of Cloud for Startups: Explore the benefits, risks, and best practices of cloud technology for startups to achieve scalability, cost-effectiveness, and reliability in their operations.

Unlocking the Power of Cloud for Startups: Benefits and Risks to Consider
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If you’ve been using Google Docs, Office 365, Dropbox, or Slack in your startup, then you’re already using cloud technology. With 63% of small business workloads and 62% of their data predicted to be in the cloud within a year, startups stand to benefit tremendously from this technology.
Cloud technology helps startups scale rapidly and cost-effectively, and collaborate efficiently. In fact, it has become such an imperative that Gartner reports that 85% of organisations will become cloud-first by 2025. There are, nonetheless, concerns surrounding areas such as privacy and control. In this article, we’ll discuss the benefits and risks of cloud technology for startups, and share best practises to help ensure a successful adoption.

Benefits of Cloud Technology

Flexera reports that over half of small- and medium-sized businesses spend more than $1.2 million on cloud services. Here are some reasons why:

Cloud technology is scalable

Traditionally, in order to scale, startups needed to invest in additional hardware and software, with the associated costs. Cloud computing eliminates this, making additional computing resources available with at the click of a button. Cloud services are available on-demand and can also be easily scaled down when no longer needed, allowing businesses to only pay for what they use.

Cloud technology is cost-effective

As just mentioned, cloud services are paid for as needed, eliminating the need for upfront investments in hardware and software. Hardware installation, configuration, and maintenance is the responsibility of a third-party provider, which also bears the cost of security updates. Startups normally access these services through a paid subscription, freeing up their valuable capital for other needs.

Cloud technology is reliable

On-premises installations can become vulnerable to single points of failure, potentially exposing startups to significant data loss. To counter this, cloud service providers offer robust infrastructures backed up by leading-edge encryption and security software. They also perform routine security audits, enabling them to respond swiftly to threats. Therefore, mission-critical data, applications, and files are shielded from hardware failure, power surges, natural disasters, and theft.

Risks of Cloud Technology

The cloud, as with any technology, also carries its risks. By becoming aware of these risks, startups can make informed decisions and avoid common pitfalls.

Privacy concerns

Even with highly secure cloud services, privacy regulations such as the GDPR place stringent requirements on how small businesses handle personal information. Regardless of the security measures which cloud providers implement, it ultimately remains the responsibility of businesses to ensure that customer information is protected. Therefore, startups should thoroughly vet their cloud service providers and complete their due diligence.

Internet connectivity

As reliable as internet connectivity has become, there remains the possibility of an outage. This may result in costly delays, loss of trust, and inability to access important information. Businesses can mitigate these risks by investing in reliable internet services as well as backup services — perhaps even considering mobile data solutions. They could also explore hybrid solutions which combine public and private clouds, and on-premises solutions.

Visibility and control

While outsourcing their infrastructure to third parties saves startups time, money, and effort, it also means they have less control over their systems, software, and assets. Therefore, it becomes harder to assess overall system efficiency and obtain an overview of system performance. Small business decision makers can manage this challenge through monitoring tools or by discussing their options with their cloud service provider.

Achieving the Optimal Level of Cloud Adoption

Businesses of all sizes are turning to the cloud to help them deliver faster value, more efficiently, while remaining competitive. Therefore, the right cloud strategy can transform a business if implemented correctly. The following are key steps that startups can follow on their cloud adoption journey:
  1. Evaluate the business costs, drivers, and trade-offs. This helps determine the cloud adoption mix (SaaS, CIPS, Legacy), infrastructure model (public, private, hybrid), and extent of cloud adoption (e.g. 40% cloud to on-premises).
  1. Evaluate and optimise for different lines of business.
  1. Establish cloud governance policies.

Key Takeaway

Flexibility is key to cloud adoption. To avoid paying for resources they don’t need, startups should prioritise applications with variable usage for cloud migration — these include common applications such as email, CRM, and helpdesk software. If legacy applications are no longer efficient, they should also be migrated; otherwise, a cost-benefit analysis will reveal whether they are worth maintaining.
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Frequently Asked Questions

What are the main benefits of cloud technology for startups?

Cloud technology provides scalability, cost-effectiveness, and reliability. It allows startups to scale rapidly without the need for additional hardware and software, only paying for the services they use. It also offers robust infrastructures with leading-edge security measures, protecting data from various threats.

What are the potential risks of adopting cloud technology?

There can be concerns around privacy, internet connectivity, and control. Startups need to ensure they're compliant with privacy regulations, such as GDPR, when handling personal information. They also need to plan for potential internet outages that could disrupt access to cloud services. Lastly, outsourcing infrastructure to third parties means less control over systems, software, and assets.

What steps should startups follow for successful cloud adoption?

Startups should evaluate the business costs, drivers, and trade-offs to determine the right mix and extent of cloud adoption. They should optimise for different lines of business and establish cloud governance policies. It's important to prioritise applications with variable usage for cloud migration and conduct a cost-benefit analysis for legacy applications.