April 15, 2010, 3:25 PM — While some large enterprises have moved their information-technology infrastructure to a third-party managed service to save costs, small firms--especially startups--have come to rely on cloud services to cut initial outlays and help them focus on the core services and products.
Infrastructure-as-a-service offerings, such as Amazon's Elastic Computing Cloud (EC2), typically are used by larger enterprises to give research-and development groups flexibility in resources. For startups, eliminating the large capital expenditure of a data center at the outset has allowed many to reduce seed money and keep their burn rates that much lower, says Oliver Friedrichs, CEO of antivirus firm Immunet, which launched its first product last August.
[For timely cloud computing news and expert analysis, see CIO.com's Cloud Computing Drilldown section. ]
"It's a big win for smaller companies to leverage the cloud because you are really saving a lot--it is really avoiding a large, up-front investment," says Friedrichs. "Five years ago, we would have had to build out a data center and the sheer cost of that would have made it much more difficult to launch our business."
Immunet has no datacenter of its own. Instead, the company uses Amazon's EC2 to analyze malicious code for patterns that can help its product, Immunet Protect, recognize viruses and Trojan horses. The firm also uses the cloud to keep antivirus service available to its more than 125,000 users, adding new virtual servers as its user base grows.
The cost savings and scalability of infrastructure-as-a-service offerings are well known advantages. Yet, there are others. In interviews, three small companies that use the cloud--and one that does not--share the lessons learned from growing up with cloud infrastructure.
1. From IT management to software development
Foregoing a datacenter immediately saves small companies a significant cost: Server administrators and datacenter managers. Yet, rather than reduce headcount, many companies are instead using the reclaimed budget to invest in software developers that have experience working in the cloud.
"In a traditional data center, we would need an IT person to rack the system, maintain the servers, and own the hardware," says Immunet's Friedrichs. "So rather than hiring someone, we now have software developers that are writing on a very flexible platform that Amazon maintains."
For sales forecasting and analytics firm Right90, the cost savings of moving its infrastructure to the cloud was too advantageous to ignore. Right90 didn't start its business using third-party infrastructure, but the cost savings and flexibility of cloud services beckoned. Last year, the company moved out of its data centers in Calgary, Ontario and San Francisco, California and adopted Amazon EC2 with backup to servers located at the firm's own offices. The lack of servers to manage has freed up Right90's IT management team, says Arthur Wong, the firm's CEO.
"The IT operations guys are still doing, what I would call, more strategic things in the organization, rather than managing data centers and servers," he says.
2. Downtime is low
One concern in moving to the cloud is that the providers--such as Amazon, Google, Microsoft and Rackspace--become targets for attacks that could cause significant downtime. Yet, so far, Immunet has had no problems with Amazon's service, Friedrichs says. "It is fair to say that since we launched, we have had zero downtime," he says.
Moreover, the ability to spin up a new server instance in seconds gives customers redundancy that they would not have when managing their own data center, Friedrichs argues.
"In a physical datacenter, your servers would be safe but you would not have clustering and failover to the same extent you have with cloud," he says. "You would have to plan in advance and have the redundant servers bought and provisioned."
3. Security is still your headache
Many companies believe that using a third party's datacenter to host your servers means that security will be managed as well.
Not true, Friedrichs says.
"You do need security knowledge and security background, because you own these systems," Friedrichs says. "There is no difference between securing these in Amazon's cloud and securing them in your own datacenter."
