TECHNOLOGY

In Cloud We Trust? Don't Bet Your Business On It

Yes, the cloud offers some incredible efficiencies and capabilities. But it can prove disastrous if you aren't well-grounded.
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There was a time when saying that someone "had their head in the clouds" was derogatory; the implication was that they were foolish dreamers or cock-eyed optimists, i.e., not the kind of grounded-in-reality person that you could believe in (or invest in). Thoreau wrote about people building castles in the air (which he said was where they should be), but then cautioned that the next step was to put solid foundations under them.

Today many companies have their heads in the clouds, literally. You can't go anywhere without hearing another pitch for SaaS (software as a service) or endless arguments for putting your products and services in the cloud.  The cloud is supposed to be way cool, and almost everyone will tell you that it's definitely the place for your business to be. I, however, say maybe, because it depends entirely on what kind of business you're building, and whether you've built the right foundation for growth.

The Good, The Bad and the Deadly

Sometimes, especially in the world of technology, the more things change the more they stay the same. I don't want to rain on anyone's parade, but the cloud is no more a panacea than any of the other wondrous tools and technologies that came before it. The cloud can kick-start you, or it can kill you if you're not careful.

If your business plan and model are appropriate, the cloud could be a big help. But if your model makes no sense, then nothing, including the cloud, will make much of a difference. When you look closely you discover that the cloud is not magic, it's just an environment to operate in. For your startup to be successful anywhere, whether in the ether or down on Earth, you've still got to build a business that's well-grounded and smart. There's no question that the cloud is cheap and easy in many ways, but there are plenty of things that you should never do for your business, and trying to do them cheaply is much worse than not doing them at all. So do your homework before you head into the ozone. Begin by thinking harder about what exactly you're trying to build. 

The cloud encourages us to chase the world and boil the ocean from Day One because those opportunities are theoretically there for the taking. But, if you fall for the long thin line (essentially the polar opposite of the long tail), you'll find that you're stretched way out (a mile high and an inch wide) and that a relatively modest upset, piece of bad news, or other disturbance can knock your whole enterprise off course, because your real connection to so many of your remote and very distant customers is so tenuous.  To build a smart business, you never want to be spread too widely or have too thin a connection to your users, yet this is how I see a number of businesses structured today.

You want to be focused, but not single-threaded. You want to be straight, but not narrow. And you always want to have a couple of ways out of any tight spots.  It's easy to drink your own Kool-Aid if you're not careful. For example, if you're disrupting and revolutionizing an industry where the standards of response time and performance were historically measured in days or weeks, you don't have to introduce your new solution in terms of minutes or hours. Give yourself some breathing room. It's always easier to improve than to walk customers back from some insane, unscalable and hyper-costly benchmark that you simply made up.

Life in the cloud can encourage too much information, a tendency to be too data-driven. This can actually limit your opportunities, and your upside, because you can fall in love with the measurements and lose sight of critical relationships and your real business objectives.

When we constantly measure our results against purely pre-defined goals and objectives, it's too easy to develop a case of tunnel vision. Even as the data tells us that we are drawing nearer to the goal ("Our uptime is great and our response time is terrific!") and as we convince ourselves that we're getting better and better ("We have customers in 50 countries!"), we lose sight of some very important facts: these may be easy things to measure, but they aren't necessarily the important things to focus on or optimize for the long run; too much of a good thing probably isn't a good thing if it's too soon to manage it; and there may be much larger and broader opportunities over the horizon and outside of our immediate zones of interest, so while we're feeling good about our near-term progress someone else is out there getting ready to steal the main prize out from under us.

Because the cloud can so readily and inexpensively connect us to many users everywhere, and because it enables degrees of unimaginable and constant connectivity, it is very seductive and therefore it's very easy to run down these rabbit holes and lose your way. You can quickly end up over-extended, under-manned, and unable to meet the commitments you've made to your users and customers. It's pretty lonely and uncomfortable sitting on top of that pinnacle wondering what went wrong. But at least it's not crowded.

IMAGE: Getty Images
Last updated: Apr 22, 2014

HOWARD TULLMAN | Columnist

Howard Tullman is the CEO of 1871 in Chicago where, at the moment, 260 digital startups are building their businesses every day. He is also the general managing partner of G2T3V, LLC and Chicago High Tech Investors – both early-stage venture funds; a member of Mayor Emanuel’s ChicagoNEXT Innovation Council; and Governor Quinn’s Illinois Innovation Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. @tullman

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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