Blog | Cloud Computing: A boon to StartUps in Financial Slowdown Period

Cloud Computing: A boon to StartUps in Financial Slowdown Period

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The last two years have been tough for all businesses. The pandemic has devastated many small and medium-sized businesses (SMBs) and brought down their revenue to a point that they were left with no choice but shut down their business. Many businesses redesigned, reconsidered and revamped their entire business models to withstand the pandemic challenges of remote working, zero motivation, lack of funds, less business demand and related supply, etc.

Among all the businesses, the worst affected were startup companies. Startups embody nearly 90% of the world’s reported businesses and employ 50% of the world's workers. They are regarded as pillars of the country’s economy, these pillars were shaken and forced to close their operations due to less revenue and work. However, many startups survived and managed to operate smoothly with good revenue; and this became possible due to cloud computing services. The technologies have proved to be a saving grace in this financial slowdown period. Businesses that invested in cloud were able to surpass the current pandemic; on the other hand, those who didn’t were affected badly. Today, the cloud has become an integral part of all businesses and the most sought-after solution for organizations virtually in every industry. As a result, all companies are leveraging cloud technology in the pandemic period. According to a research by Cisco, cloud will handle almost 94% of the business work within next 3 years.

Why are startups adopting the cloud?

Today’s startups are born in cloud; they are adopting the cloud, and building apps with innovative digital technologies more than ever.  Startups are using cloud computing for many reasons than budget, such as flexibility, security and scalability. With cloud computing, a third-party vendor owns and manages the IT resources and leases them to businesses for use on a subscription basis. Any required changes or maintenance is the vendor’s responsibility. For example, if your startup needs extra bandwidth or computational power, it can be done through a simple request to vendors who will do it for you at amended subscription fees.

Additionally cloud is easy to use, budget-friendly, many features are offered as freebies, doesn’t need any unique resources, and payment is a usage basis which helps to invest more as and when required.

Whether it is a software as a service (SaaS), infrastructure as a service (IaaS), platform as a service (PaaS), or other managed service, with the cloud you get a wide range of the cloud-based services for your different business needs. The subscription based fee structure of cloud further makes it more affordable for startups than the traditional IT solutions with high upfront CAPEX costs.

The key cloud service providers AWS, G-Cloud and Microsoft Azure have designed customized cloud programs to meet the requirements of startups at each stage. Stages of the startup tech companies can be categorized as early, minimum viable product (MVP) level, launch and blitz scaling one. If your startup falls under an early stage, you can use AWS Activate at this stage program to avail the cloud services at a reasonable rate. For more mature startups, incubators and providers, AWS has designed Activate Portfolio. Startups can use these ready and easy to use customized cloud programs and save big.

Most of the cloud providers offer a set of services and technologies which can help start-ups secure their data as it is located on reliable servers that make regular backups. With cloud-based backups, companies do not need to worry about losing data stored in remote locations.

Cloud computing is sustainable, which can help start-ups to gain new customers and retain the old.

Cloud enables startups to compete with well-established players with access to the expertise and resources offered by cloud vendors. Additionally, 24/7 managed support is provided. Startups now have access to a wide range of software and hardware, which was not possible earlier in the traditional IT environment.

Common cloud mistakes by startups

study by Bobby Chernev reveals that 90% of startups fail, and only 40% manage to make a profit; the reasons for failure were cited as lack of cash, lack of investor or financing interest, pricing and cost issues. As startups are low on the financial side, they have to keep their budgets in-check to succeed. Startup adopts the cloud as it is cost-effective, offers independence, flexibility, reliability and scalability. When adopting the cloud many startups make common mistakes that can affect their scalability and weaken their financial growth.

In 2018 because of the development team’s mistake, Adobe unknowingly wasted $80K in cloud cost; another tech giant had to pay heavily after exceeding the spending in AWS beyond their anticipated budget. The reason behind these mistakes was - unexpected traffic spikes. Even though the cloud can help startups survive the financial slowdown period, these examples show how a minor topple in the cloud strategy can hamper your business’s scalability and finances. Chances of startups making such mistakes and losing big are very high; that’s why before moving to the cloud, it is vital to know the common cloud mistakes made by the startups and how to avoid them. Let’s take a closer look at some of such mistakes.

Many startups deploy apps or solutions without evaluating their cloud need, without discussing them with other departments and make the wrong decision of directly adopting the cloud. This results in non-optimized cloud benefits.

What to do

Always start with assessing what your business actually needs, and devise a cloud strategy in-line with your performance targets. Gartner states, “a right cloud strategy is a central role that the cloud plays in an organization”.  Always involve all departments of your company when creating a cloud strategy for better decision-making. Have an exit plan for the situation when things go out of control or budget.

Before moving to the cloud, startups must first consider deciding which provider to partner with and check which cloud suits their business needs best. Not doing your research correctly is the other common mistake due to which startups end up paying more on the features they do not need or use.

Deciding the right cloud partner is important as cloud infrastructure is tailor-made for every business’ individual needs by cloud providers. The trouble starts when vendor’s payment model is complicated and offer rigid, non scalable platform.

What to do

• Do your business requirements evaluation before selecting a cloud service provider. You can have experts’ opinions if you don’t have the required expertise or consider outsourcing it to a professional.
• A right cloud service provider helps you analyze your unique requirements and provide recommendations before starting the service. Select cloud providers based on your business goals and needs, not trends and popularity. Give a try to different cloud vendors and before finalizing one of them always use their free trial programs.
• Estimate your upfront cloud transition expenses with MicrosoftGoogle and Amazon pricing calculators.

Overall the following factors can help you choose the best cloud provider in-line with your business needs:
• Evaluate business requirements
• Know storage and computing requirements
• Identify users and devices count
•Estimate the budget

Businesses rush to the cloud in an unplanned manner and then complain about slow transition and cost wastage than estimation. You may have complex, huge applications running on millions of code; moving all of the application components simultaneously to the cloud will only lead to poor performance and maintenance issues.

What to do

Move your applications to the cloud in stages. Follow a step-by-step migration approach.

The cloud could go down sometimes, just like the traditional IT infrastructure. Consider implementing the famous saying in the cloud community, “Design for failure and nothing will fail”.

What to do

Execute the cloud-optimized failure-tolerant cloud architecture and ensure to opt for a cloud service provider who offers a reliable data recovery system.

$1.52M was lost in data breaches in 2020 which was $1.42M in 2019. Data breaches are costly and can kill business scalability. Most of the startups struggle to execute security protocols. Startups must establish a security-first approach when migrating their workflow to the cloud.

What to do

Ensure that your startup is following all the cloud security practices. In addition, verify if your cloud service provider is following the compliance laws apart from the security measures they provide.

The bottom line

Cloud technology has helped many startups survive the financial slowdown period. Cloud is offering multiple business benefits to start-ups and helping them to scale more. However, to achieve measurable business results and increase the success rate, startup companies shall consider following some of the practices, such as establishing a proper cloud strategy, deciding the cloud spend as per the available budget, using the freebies and discounted cloud deals, auditing cloud needs and use as per actual business demands and choosing the right cloud partner.

Pandemics are unpredictable, but you can always use digital technologies to secure the future of your business. Ignoring the lessons learnt in this pandemic and not thinking about embracing the cloud even after witnessing how it saved so many businesses from breaking down in tough times may only delay the plethora of benefits that the cloud can add to your business.

In the past few years, many startups are benefitted from Minfy’s cloud services and solutions. Are you a startup, looking for answers to your cloud questions? Contact us today and learn more about how we can help your company.

Book 1-hour free consultation with pricing details

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