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Home > Entrepreneurship, Finance, Start Up, Strategy, Venture Capital > Start-ups ride the Cloud!

Start-ups ride the Cloud!


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Cloud computing services (SaaS, PaaS, IaaS) offered by various market players have over the years reduced the TCO for many Industry players. Although, about ten years ago when the cloud services started becoming popular, the reigning thought was that only smaller and mid-size industry players will move to the cloud. The bigger players will still prefer the ‘on-premise’ option. But, today we see even largest players in their segments availing the advantage of the cloud services to keep costs in control by paying-on-the go rather than incurring capital expenditure upfront.

‘Pay-as-you-go’ cannot me more beneficial to anyone else but start-ups. We all know that start-ups work on shore string budgets and would it will be foolish for them to spend on something which they are not using right now. Computing capacity is one such item on the list of start-ups. Why should a start-up pay for a storage space which it is not using? They would love the idea of expanding the storage space as their storage needs expand. This is one example of many instance where the costs for start-ups have been drastically brought down by the Cloud service providers.

A recent survey of 550 start-ups by BestVendor found out that majority of start-ups prefer using cloud-based resources for various activities- QuickBooks (71%) for accounting, Google Analytics (70%) for BI, Salesforce.com (59%) for customer relationship management, and Dropbox  (39%) for storage and backup. 

Reduction on up-front costs:

 A report on statistics on start-ups by O’Reilly Media shows that companies can save up to 30% in IT costs over a three-year period employing cloud resources versus on-premises equipment. This is a compelling proposition for the startups who would like to extract the maximum out of every penny available. The first three years are again very crucial years for a start-up. If the start-up is able to save 30% of its expenditure on IT- why should it think twice?

Fixed costs vs variable costs:

Every organization likes predictability. Larger organizations might be able to predict their future needs for various resources based on their empirical data of the past, but same is not the case for a start-up. One never knows how the demand for various resources needs to pick up (or go down). Cloud services help one to convert majority of the fixed costs on IT into variable costs. Now, that is what brings predictability to the forecasts for a start-up. One can ‘order’ storage space, processing space, number of email IDs etc on the go.

One of the biggest concerns earlier on cloud services was reliability of the provider. But, today, many big players in the IT industry today provide cloud services. The presence of Google, Amazon, Microsoft, SFDC etc. has brought a strong factor of reliability and security to cloud services. Majority of these companies have a strong focus on start-ups and its prudent for start-ups to explore these resources. Why not use these cloud resources on offer and save some precious dollars for your start-up?

 

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