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Five tips to mitigate the risk of a cloud outage

Selling cloud-based services? These five tips can help service providers mitigate the risk of a cloud outage.

It's finally happened.

You've listened to everyone in the industry and moved all of your customer's data into the cloud. There are no more in-house servers and you've implemented every cloud-based service imaginable. All of the services that keep your customer going -- e-mail, calendaring, file sharing, enterprise resource planning, customer relationship management and Voice over Internet Protocol -- now exist in the cloud. To make things even better, you've partnered with one vendor for the benefit of a bundled price and ease of management. Everything has been working great, your customer's employees are happy, you've saved money on the IT budget and the customer's bottom line has increased.

Although unfortunate, business failures are a fact of life. A cloud provider can go down for a variety of reasons: financial difficulties, legal entanglements, market issues and/or management problems. We've seen our fair share of cloud-based service vendors that have gone under such as Nirvanix, Trustyd, 2e2, Nebula, SunRocket, Ubuntu One (File Service and Music Store) and Code Spaces. Each of these companies has their own story for why they went under. There is one thing in common between all of them -- we, the channel partners and our end-user customers, had no control over the situation that occurred.

Here are five tips that can help you -- and your customers -- minimize the risk of a cloud outage.

1. Ask the right questions

As consumers of a cloud-based service, or multiple services, we often fail to ask the proper questions from our cloud providers. When we ask the right questions we can help mitigate some of the risks associated with having data in the cloud: How is the provider funded? With the proper funding through a mix of investors, companies tend to have the ability to continue to get funding. How many rounds of funding have occurred? In those rounds of funding, have the original investors continued to participate? Having original investors participate is a sign of strength as they believe in the product and company. Is the company liquid? In the event that the company was to pay off all of its debt today, would there be a surplus of cash leftover? This information is crucial to know prior to selecting a cloud-based provider, but many people often overlook it.

2. Hedge your cloud bets

When we ask the right questions we can help mitigate some of the risks associated with having data in the cloud.

Even knowing the financial position of a vendor does not guarantee that they will not go under. There are other ways you can protect yourself. Prior to engaging with any cloud-based service vendor, it is imperative that a contingency plan be created. Have you heard the phrase, "don't put all your eggs in a one basket"? There are many different cloud providers that exist and each one has its own niche. Spreading your customer's cloud business across multiple providers allows it to continue to run in the event there is a major issue with one of them. If your customer's email systems are with one provider, its VoIP system should be somewhere else. In this scenario, your customer still has a method to communicate with its clients and colleagues and can mitigate the damage in the event that one of those systems goes down.

3. Keep an extra copy

Your customers' data is their most important business asset and irreplaceable if lost. Even though you have shifted backup and recovery to your provider, it is still in your best interest to keep a copy of this data. What good is a backup that is in the hands of the now defunct provider? Your copy can be kept locally or through another cloud provider. It is comforting to know there is a secondary copy of your customer's data that your primary provider has no control over.

4. Have a legal agreement

Another method to help avoid disaster: your legal agreement with your provider. Your agreement should outline exactly what would happen if the company decides to shut its doors. How long will you have access to the cloud provider's systems and your customer's data? A week, two weeks, a month? It will take time to migrate the data from one provider to another and the timeline has to be sufficient for that to occur.

5. Create an escrow account

You're probably wondering, "Why would I need that?" Well, some cloud vendors have proprietary software systems and even if you get your customer's data out, you cannot do anything with it. You can negotiate with cloud providers to have the proprietary software locked into the escrow account. Based on the terms of the agreement, access to the software locked in this escrow account would only come into play if the provider declares bankruptcy or goes out of business.

The main idea here is to prepare for a cloud provider failure before it actually happens. That is the approach that we have taken with in-house systems; so why abandon that once we go cloud? We are faced with some of the same potential end results although the scenarios around them may very well be different. No matter how much of the burden you try to shift onto your third-party providers, it is ultimately your customers' business and data that is on the line.

Take these measures to protect those assets: Find out the financial situation of your provider, use multiple cloud vendors, back up your customer's data and understand your cloud agreements.

Next Steps

Review cloud outage figures among the major providers

Read about the impact of cloud outages on public perception

This was last published in June 2015

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Have any of your cloud-based service providers gone out of business? If so, how did you handle the situation?
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