Is The Cloud Boosting The Startup Economy?

Many startups in the past three years have said that they would not have been successful if it weren’t for cloud computing, which enabled them to create an IT infrastructure to support their operations without taking a bite out of their precious capital.

startup in the cloud

Unlike in the boom years around 2000, startups are conserving capital rather than spending on lavish launch parties, prestigious office space and Aeron chairs. Instead, the new breed of startup focuses on the basics that will make the business successful in the long run. Many economists and industry trend watchers call this change in attitude the “do it yourself” economy because these startups are often self-funded rather than relying on unlimited supplies of venture capital.

For companies of any size, cloud computing can replace the entire IT department, with services ranging from enterprise strength CRM, PLM and ERP to off-site data storage and essential services such as backup or disaster recovery.

More and more people are comfortable with the concept of cloud computing. Consumer products offering cloud storage or applications in the cloud have made them realize that as long as the data is accessible, it’s much simpler to store it on the web. There are no worries about backups or disk crashes, because the service provider handles all the routine maintenance. Even traditional desktop PC applications such as word processing and spreadsheet analysis are available on a subscription basis in the cloud. As they become comfortable with cloud computing in their personal lives, it becomes a short step to relying on the cloud for business as well.

It’s easy to get started with cloud computing services. You can usually sign up right on the web site, add users or capacity at will, and cancel with little or no notice. In addition, cloud applications don’t require much set up or implementation, so they’re fast and efficient. Cloud computing has a major impact on the organization’s ability to execute, and yet makes a minimal impact on its finances.

Recent research from Manchester Business School reported that 56 percent of UK firms are re-investing the money saved through cloud computing back into their business – with 15 percent employing more people with the cash saved. Frequently reported benefits of cloud computing include:

  • Cost savings through avoiding IT infrastructure costs – 58%
  • Ability to scale up cost effectively – 48%
  • Easier to deploy, use and manage than on-premise solutions – 46%
  • Ability to buy only what we need, without paying for additional service elements which we will not use – 45%
  • Productivity gains due to less time dealing with IT issues – 41%
  • More control over what we spend – 38%
  • Predictable monthly costs help to manage cash flow – 36%
  • Access to industry expertise from cloud providers – 27%
  • Access to the same caliber of high performing services that larger competitors use – 24%

Even though 88 percent of respondents to the research felt that cloud computing had saved the company money, and 56 percent felt that cloud computing had contributed to profitability, some executives are starting to feel that cloud computing has been over-hyped as a cost saving methodology. Unable to define a precise ROI, these executives recommend proceeding with caution.

Executives at other startups are convinced that their companies would not have been successful without cloud computing, and these executives embrace the DIY economy and cloud computing as a way to conserve capital, add predictability to the budget process and increase competitiveness with a world class IT infrastructure.

Editor’s note: This infographic can show you an alternative look into the trends Dawn pointed out above – indeed, the cloud helps startups cut costs…

american startup trends infographic
Via ProfitBricks

Editor’s note: So, what is your view about the cloud? Is it really a game changer or just an exaggerated trend in business computing technology? Should you embrace cloud computing? Please share your opinion by leaving a comment on this blog post.

About the author: Dawn Altnam lives and works in the Midwest, and she enjoys following the business tech world. After furthering her education, she has spent some time researching her interests and blogging of her discoveries often. Follow her on Twitter! @DawnAltnam