The cloud — which lets startups host operations and data online rather than on a server — is becoming a popular way for businesses to scale operations as they grow.
Research says 69% of companies accelerated their migration to the cloud over the past 12 months, and the percentage of companies with most or all IT infrastructure in the cloud is predicted to jump from 41% to 63% over the next 18 months.
But for founders tight on time and money, choosing the right infrastructure — from provider to plan cost — can be an overwhelming task.
Unfortunately, there is no "one size fits all" solution. We asked cloud computing company DoiT, and Paul Oesten-Creasey, chief technology officer at real estate SaaS scaleup (and DoiT customer) VU.CITY, how startups can reach cloud nine while keeping costs low.
To spend or not to spend
So, why should startups care? Cloud platforms offer startups the chance to grow, improve efficiency and centralise their whole operation. In the early days of launch, this kind of infrastructure is invaluable for streamlining admin and storage processes and helping teams collaborate online.
DoiT International is a global company that helps businesses harness cloud technology and services to scale. It recently launched a report in collaboration with Google Cloud, The Cost-Conscious Cloud, to help startups with their cloud conundrums. The report outlines how important it is to understand that managing costs isn’t the same as simply cutting costs, and the latter won’t get you far.
“Sure, you should delete unused storage, but setting reduced cloud spend as the overarching goal is not a strategy for future success,” John Purcell, chief product officer at DoiT told Sifted.
Sure, you should delete unused storage, but setting reduced cloud spend as the overarching goal is not a strategy for future success
How much you should spend varies from startup to startup, and there’s a huge range of cost packages out there. But you should always start with what your business actually needs. This means you can tie your cloud costs to your business performance targets, which lets you justify spend — and future larger spend — as you grow your startup’s cloud infrastructure.
To figure out your needs, DoiT recommends having clear visibility over your company’s cloud spending and who is incurring it. A tagging system can help you identify, track and manage spend, and an automated cost checking system will alert you when your budget overruns and cost spikes occur.
Choosing the right cloud partner
One of the first things startups need to consider when migrating to the cloud is which provider to partner with; to make an informed decision, startups need to evaluate their own specific workloads to see which is most suitable. This is important because cloud infrastructure needs to be tailored to a user’s individual needs, or a startup could end up spending unnecessary cash on features they won’t use.
One way to approach this is to invest in a cloud partner that can help them look at their company’s unique requirements and provide recommendations. This can take away the time-consuming process of doing your own research on the topic by passing on the task to an expert.
For example, DoiT’s Flexsave product automates cost management to optimise savings with no commitment or risk, taking the burden away from startup founders who are often wearing many hats in the early stages of launch. Investment in such technology can help founders keep on top of their spend, ensuring it stays in line with both their budget and operational needs.
“If you are a startup, the best thing about the cloud is that the technology allows you to focus all your energies on building your business,” said Purcell. “Working with a public cloud provider means you don’t have to invest in costly hardware and software. This also means your limited resources are not tied up with maintaining on-premises systems and you have access to customer and technical support from your cloud partner.”
Working with a public cloud provider means you don’t have to invest in costly hardware and software
Ultimately, scaling a new business can be much easier with access to on-demand resources on the cloud. These resources are also invaluable when it comes to data insights, which can help improve your products and services.
Tried and tested
VU.CITY is a smart city planning platform that creates interactive 3D models to help architects, developers and planners make better designs and planning decisions. The company uses the cloud to deliver its application to end users, process data and shared drives.
When asked what the perks are, VU.CITY CTO Paul Oesten-Creasey listed infinite performance and storage, maximum upload and download speeds, no upfront costs and security and backup. The only downside, he said, is the increase in costs compared to local hardware. Covid-19, remote work and the breakup of the office as a storage hub removed the last hurdle.
“The nice thing about using the cloud is that there isn’t much of an investment — more of a divestment in local storage and compute,” Oesten-Creasey told Sifted. “As a scaling SaaS company, the capital expenditure of our own hardware versus the operating expense of the cloud is a no brainer.”
I initially thought we would use cloud cost calculators to work out costs per resource, but this was just too complex a problem
Oesten-Creasey collated VU.CITY’s analytics and forecasting and, after consulting with Google and DoiT, committed to a long-term cloud investment plan that was tailored specifically to the company’s needs.
“I initially thought we would use cloud cost calculators to work out costs per resource, but this was just too complex a problem,” he said. “We had to simplify it using historical cost data and user growth numbers to do our cost forecasting. This has ended up being pretty accurate — we’re within a few percentage points of our estimates three to four months in.”
Taking the time to step back, speak with experts and analyse your actual cloud need versus the generic cloud offering hugely increases a startup’s chance of a successful and cost efficient switch away from software or hardware.
Getting started on the cloud
The DoiT x Google Cloud report flags accurately measuring cloud spend and planning for cloud infrastructure costs, integrating costs into a product’s lifecycle and implementing a system that will alert you to issues such as budget overruns and cost spikes as important areas that can keep costs down.
“A significant proportion of our revenue goes on cloud costs because we deliver our application via cloud with pixel streaming,” says Oesten-Creasey. Pixel streaming allows developers to stream rendered frames and audio from the cloud to users through a web browser. “Conversely, a significant portion of our revenue is ours solely because we deliver our application via cloud.”
A significant portion of our revenue is ours solely because we deliver our application via cloud
Taking the first steps for moving your operations to cloud-based tech may seem overwhelming, but the right preparation and partner can make it a simple process. Being mindful of the varying costs involved and what impact they would have on a startup — both financially and operationally — is key throughout.
“It’s important to remember that managing cloud costs is not just about cutting costs,” says Purcell. “Cloud economics means you need to take a consumption approach and always align your demand with the most appropriate services and pricing arrangements, so you can tie your cloud costs to your business KPIs.”
So, how much should your startup spend? Evaluate what features are missing from your current software or hardware and prioritise those as you decide on a package. These, plus the day-to-day features that are essential to your operation, should form the basis of your search. Remember: the joy of the cloud is that it’s quick and easy to expand your infrastructure as your business scales in the future.
Explore the DoiT x Google Cloud report, The Cost Conscious Cloud, here.