Cloud Benefits Not Falling on Deaf Ears in Startup Community

March 9, 2011 CollabNet VersionOne

Recently I gave a talk at iLab’s CEO luncheon on my story founding and running CVSDude / Codesion to iLab member CEOs. iLab is a startup incubator based in Brisbane, Australia that we once were a member of ourselves. These talks let members share their experiences in running a successful startup. I remember going to these talks years ago and listening to the war stories people had about their past experiences, the lessons they had learned, things they would change and what went right.

On the drive home I was going over some of the questions from the audience and how many of them were about cloud services. Edgevertise was debating whether or not to use Salesforce or Highrise – both of which are cloud-based services. Most of the audience members were also using Codesion (always good to hear). The fact that all of the startups were talking exclusively about hosted-cloud services really struck me. There was no mention of do-it-yourself email, server hardware, document storage, or phone systems, which highlights how startups have embraced running their business in the cloud.

When I started CVSDude back in 2002, before the term “cloud” had been coined and SaaS was a meaningless palindrome, we were running our own hardware in our own server room, managing our own email, using a home-grown billing platform, and a host of other in-house solutions for non-core business requirements. Now, all of these services have been moved to the cloud. For most startups this concept seems odd – why would anyone want to manage bare metal servers when you can pay by the hour at Amazon EC2 or rent servers monthly from Softlayer?

The value proposition for SaaS and cloud-based tools is very enticing for startups with limited resources. They’re focused on allocating resources to essential business growth activities – not having to worry about software licenses, hardware contracts, and support staff to maintain and manage it all.

In this ecosystem, it seems the battle for the cloud is all but won, when it only seems like yesterday that our prospects started out the conversion with questions (and assumptions) around the security of source code in the cloud versus in-house. The startups I spoke with don’t seemed phased by these decisions – now the question is more like “which cloud service should I use?”

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