Is your Cloud Provider making money? Arrow to Content

May 17, 2010 | Leave a Comment

By Jim Reavis

At a recent Cloud Security Alliance event, George Reese moderated a panel about Public/Private cloud interoperability and application portability. It was a great discussion, and I hope to be able to publish the proceedings soon.

One of the common points that comes up when discussing this topic is the subject of cloud provider viability, which is one of the many reasons why we care about the topic. Obviously, you want your application (and data) to be portable if you have concerns about where it is hosted. A question I asked that has been bothering me was, how do you know if your cloud provider is making money? Financial stability is a good indicator of viability.

If the cloud provider in question is a publicly-traded company and is a “pure play” cloud company, their financial performance should be a matter of public record. A privately held company may be more difficult to pin down, but will often provide this information to the right customer. But what about a company that has a significant portfolio of products and services, of which only a few may be cloud-based? Is it easy to decipher the financial reality of a cloud product line? In these heady “cloud rush” days, it is to be expected that many companies will seek market share, and they may do so by offering loss leading products that are not intended to make money. Is it possible that the least expensive IaaS option you seek is a trojan horse to sell additional services, and if so, do you want them?

Personally, I am very interested in understanding the true profit margin (or lack thereof) of the emerging cloud services. Profit is an indicator of corporate strategy, and the cloud provider’s corporate strategy is of the utmost importance to the cloud customer – sometimes that strategy backfires. If you were to pick your 5 favorite cloud services, how much do you know about the profitability of those services?

-Jim (from riskbloggers.com)

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