In a recent episode of the HBO comedy Silicon Valley, programmer Bertram Gilfoyle sets up a small data centre in the garage of the suburban house where he and his colleagues work. Needless to say, hijinks ensued.
As anyone who knows the slightest thing about IT would know, the situation was ridiculous, though humorous. The fact is that these days few startups ever have to actually touch the core infrastructure on which their software is built and run. For the most part, they deal in bits and bytes that sit miles between their computer and the data centre in which they’re held.
Infrastructure as a concept is undergoing a huge shift as startups begin to rethink what it takes to run a business. As TechCrunch proclaimed earlier this year: Uber has no cars, Alibaba has no inventory and Airbnb has no real estate. In 2015, many of the companies disrupting the markets that they sit in do so without the traditional infrastructure of their incumbent competitors to weigh them down.
But even more interesting, is that many of them also do without the traditional overheads of the IT departments, unlike the companies they rival. They don’t have the massive mainframes, the huge headcount, or the months-long development processes that slow down their rivals.
In days gone by, an aspiring startup would have to buy its own physical servers, rent out some space in a local data centre, and install its equipment, hoping that they wouldn’t have to visit the data centre at 11pm on a Wednesday to ensure its continual operation. Though there are certainly exceptions for larger businesses, for startups that kind of thing is virtually unheard of these days.
A survey conducted by the Australian Bureau of Statistics last year found that one in five companies now use some form of paid cloud computing service, with close to a third of large businesses now using cloud–based computing services such as Amazon Web Services EC2 service. The stats point to an undeniable trend in the increase of cloud computing services in Australia.
As the cloud has matured, the economies and efficiencies extracted from such a massive scale has enabled companies of all sizes to benefit from dirt-cheap, powerful computing on which to build world-changing products.
Mobile game developer Zynga made headlines in 2010 when it decided to spend $100 million building its own data centre. Yet in March this year, the company reversed its position, shifting the bits and bytes that allowed millions of users around the world to crush candies, back to Amazon Web Services.
“There’s a lot of places that are not strategic for us to have scale and we think not appropriate, like running our own data centres,” Zynga CEO Mark Pincus said in March.
Startups are effectively disrupting their industries, without the traditional overheads and infrastructure, and the lesson hasn’t been lost on all incumbents — some are, in fact, challenging their own industries, and themselves, by removing a legacy IT environment.
In doing so, they can find not only significant cost savings, but the ability to move faster than their competitors, and in the process, the ability to innovate more quickly.
This has been thanks to the speeding up of processes that previously took hours — such as setting up a new server for testing or software production — and automating them to happen, virtually, within a few seconds. Ultimately, some companies no longer have to physically deal with infrastructure anymore — once it can be controlled through software, it can be controlled remotely and with ease.
Game–changing innovation was around long before the cloud. However, that kind of innovation is something that can be achieved much more quickly with an infrastructure that is no longer reliant on the number of administrators and engineers that the company can possibly hire.
The sort of innovation that this automation affords has led many legacy businesses to begin rethinking how they work — everything from their structure to their product, and their ability to innovate. One major player in the food industry is even taking advantage of the online revolution to move its outlets from high-street locations, with high rents, to industrial areas, where they become distribution centres for online orders.
The cloud makes that kind of innovation simpler and faster for companies to iterate, pushing out new products and services more quickly and responding to customer demand ahead of rivals.
If the ridiculous scenario from the Silicon Valley TV show took place in real life, it’s unlikely that the fictional compression company Pied Piper would have lasted long. In the cloud, updates can be made daily, hourly and even by the second, giving companies a newfound agility that was previously impossible.
The cloud now means there are two types of companies: those using the cloud to innovate and reinvent themselves and those headed for the history and “what went wrong?” management books.
Mark Randall is director of sales and marketing at Bulletproof.
Raising your first round of capital? Starting a crowdfunding campaign? Want to grow your business with Instagram? StartupSmart School can help.
