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When Flying in the Cloud You Can Be Struck by Lightning | Gaining Altitude in the Cloud

Once upon a time there was a cloud storage provider with a compelling offering.  Hundreds of small companies and prominent world-leading companies became its customers and reseller partners and moved their data to the provider’s cloud. Then bigger cloud companies offered services at lower prices and drove the storage provider out of business.

Unfortunately this is a true story. Nirvanix announced on September 17 that it was closing its doors and customers — including resellers whose customers might not have known their data was stored in the Nirvanix Cloud — have been scrambling to move their data in the allotted two weeks.

The Nirvanix story serves as a cautionary warning: You should care whom your service provider selects as its subcontractors and partners, especially if your data is mission critical or your company is in a highly regulated industry.

Nirvanix Cloud’s target market was enterprises and addressing enterprise requirements made its solution more expensive than other cloud storage options. Its pricing couldn’t compete with lower-cost options from larger players such as Amazon, Google and Microsoft, so the venture capitalists refused to do the next round of funding, thus shutting the company down.

Often cloud solutions are ecosystems that have been put together with a lot of subcontracting relationships. It’s a sign of the times and harkens back to the bubble days of the Internet in 2000. You need to conduct careful due diligence to understand those relationships and their ramifications to your business before you turn your workflow and data over to a service provider.

Our advice is to make sure that subcontract relationships are transparent to you so that you can evaluate their risk and evaluate the stability of the subcontract relationship. Above all, make sure that your provider has contingency plans in place that are transparent to you; it’s also wise to develop your own contingency plans in place just in case.

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