Your Cloud Provider Went Out of Business—Now What?

By: Ernest Sampera on May 24, 2019

As more organizations make the move to cloud-based storage and applications, services like Infrastructure as a Service (IaaS) and Software as a Service (SaaS) will continue to present profitable opportunities to small companies looking to create disruption in the IT marketplace.

Gartner expects the global cloud services industry to grow from $182.4 billion in 2018 to $331.2 billion by 2022. With more small players entering the market, companies have a wide range of services to choose from, but those options don’t come without risks. If history is any indication, companies that rely on smaller cloud providers can suddenly find themselves scrambling for alternatives when news of a bankruptcy breaks.

For organizations storing valuable customer data in the cloud, learning that their cloud provider is discontinuing services can be a harrowing experience. This worst-case scenario came to pass for customers of Nirvanix in 2013. Despite being one of the pioneers of cloud-based storage, Nirvanix failed to diversify and simply couldn’t compete once heavyweights like Amazon, Google, and Microsoft threw their full weight into the cloud market. When Nirvanix announced its closure, customers had only two weeks to retrieve and move their data.

Considering that every single moment a company can’t access its proprietary and customer data carries a hefty financial cost, it’s vital for them to have a plan in place to account for the possibility of their cloud provider going out of business.

Choose a Reliable Cloud Provider

Of course, the best strategy companies can take to deal with this problem is to make sure it never happens in the first place. When considering options for cloud services, they should conduct extensive research into the overall financial health of the provider. How long have they been in business? How many customers do they service? Do they have aggressive expansion plans? Asking questions like these prior to cloud migration can help to identify potential problem areas that could land the provider in financial difficulty if they’re not there already.

Any cloud or data center provider should also provide very specific terms explaining what will happen to customer data in the event of a bankruptcy or acquisition. If there are no terms or the details of how data will be handled are vague, this could present a problem. Even if the provider does allow customers to retrieve their data, there may be questions about whether or not the data is provided in a usable form. This can be an issue even with major cloud providers with proprietary systems like NetSuite and Salesforce, who often return data to departing customers in a simple spreadsheet format that makes it almost impossible to export to a new provider.

But having access to the data is only the first step. As Nirvanix customers learned the hard way, sometimes there are time constraints that make it very difficult to retrieve data. Many companies accumulate huge amounts of customer data over time and it can be difficult to download all of it quickly. Even using a 1,000 GbE connection, it could take more than twelve hours to download five terabytes of data; and that doesn’t take into account the likely spike in traffic that could limit bandwidth significantly.

Have a Contingency Plan

Even if a cloud provider proves reliable, it makes sense to have a backup solution in place. In many cases, the easiest solution is to utilize an entirely separate cloud provider or data center to store mission-critical data and applications in the event of problems with the primary provider. Maintaining separate cloud providers, either as distinct deployments or as part of a multi-cloud architecture, may create challenges in terms of data management and record keeping, but the extra effort is certainly preferable compared to the prospect of losing valuable customer data altogether.

These contingency plans can help protect not only against the cloud provider going out of business, but also against unexpected system downtime that can affect even the largest and most reliable providers. After Amazon Web Services experienced outages that affected the eastern US for several hours in February of 2017, The Wall Street Journal reported that companies in the S&P 500 lost $150 million, to say nothing of the numerous smaller companies that can’t afford to lose valuable business to system downtime.

Organizations can also protect themselves during a cloud migration by identifying mission-critical data and applications that can be backed up locally. These backups can be accessed quickly to make it easier to switch providers in the event that something goes wrong with the original provider. Colocating with a data center can be especially helpful in this process. Many data centers provide access to multiple cloud providers, making it much easier to back up customer data and transfer services in the event of one provider’s failure.

In many ways, planning for a cloud provider to go out of business is similar to planning for a disaster Or other forms of system downtime. Losing access to its data can be devastating to any organization. Even if a cloud provider seems reliable today, migrating applications to the cloud is a long-term investment, and there’s no guarantee that a successful provider will continue to thrive in the future. By carefully scrutinizing service agreements prior to cloud migration and taking steps to ensure that vital assets won’t be lost when a cloud provider ceases operation, companies can avoid suffering lasting collateral damage.

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