Information Management, 2013: The Year of Mass Cloud Computing Extinctions
Cloud computing provides tremendous value for businesses of all types. But as we can see from the number of products that shut down in 2013, it isn't all a silver lining. 

Cloud applications, platforms and infrastructure offers a more flexible and agile IT environment, whether a large enterprise or a company that falls into the small-medium enterprise category. Cloud computing allows companies to use their capital for creating business value rather than having it tied up in expensive data centers. Another way to look at cloud computing is that it doesn't force an organization to be in the business of data centers unless that is its actual business.

A Look at the Products We Lost  

There is a dark lining, however, to the silver cloud. When an organizations deploys a cloud solution it relinquishes control of the computing environment to a third party -- the cloud vendor.Most of the time that works out fine, but not always. Sometimes, the vendor will discontinue the cloud product or even go out of business with very short notice. A sudden shutdown can happen to any cloud vendor of any size at any time.Even major software companies can shut down a service, sometimes abruptly.

2013 has been a year of mass extinctions in the cloud computing space. Here’s a sample:

  • Google shut down both Reader and iGoogle. Both were free but Reader was widely used and relied upon for reading RSS feeds.
  • is shutting down, its SMB oriented task management software. Though not technically dead yet, unless there is a last minute reprieve it will be gone by the end of January.
  • Seesmic, a popular social media management tool was purchased by Hootsuite in 2012 and shut down this year.
  • Nirvanix was a cloud storage company that, despite a number of rounds of funding, abruptly sought Chapter 11 bankruptcy protection in October and shut down.
  • Dell terminated its vCloud infrastructure-as-a-service offering in favor of partnerships with Joyent, Zerolag and ScaleMatrix.
  • Sold, which handles the pricing and selling of products for customers, closed down after being acquired by Dropbox (in a transaction that still has many people scratching their heads).
  • Backupify suspended its free social media and email backup service. The company is still maintaining a paid service focused on businesses. Backupify built up the subscriber base numbers through free accounts, got lots of people to test their product for free, and then told them they had to pay once they became familiar with the service.
  •, a service that made it easy to send large attachments through email, was acquired by Yesware and closed down.

There were many others. These extinct or endangered products cover a broad range of markets, target customers and uses. They include infrastructure, platform and complete application offerings which target organizations of all sizes.

What Does This Mean for the Future of Cloud Computing?

The demise of these cloud products leaves us with a set of questions that affect cloud computing choices:

Why was the plug pulled on these cloud products?

The scary part is that there is no single reason. Nirvanix ran out of money, while several others were simply folded into other products. Others had become a distraction for the parent company.A number of free services became paid services.

Even worse, it’s not always clear why they ceased operations. has yet to say why was shuttered and no one knows what Dropbox’s plan is for Sold. It is incredibly hard to make good buying decisions when it is not clear what may cause the sudden cessation of service. One cannot plan for the complete unknown.

Many software and hardware products go end-of-life. Why are cloud products different?

In a word, control. In the case of an on-premises product, the buyer still has control over purchased devices or copies of licensed software. If the vendor goes bust or the product is discontinued, there is time to properly select and deploy a replacement. It may be years before it becomes necessary to complete a new buying and deployment process.

With cloud services, the buyer has no such control. When the vendor shuts down the service, it’s could be done in a weeks or months. only gave customers (paying customers by the way) a few months to find a different product to use and Nirvanix customers only had a few weeks. The relative abruptness of a cloud shut down is something that cannot be easily planned. This creates more uncertainty with a cloud purchase.

If the cloud vendor ceases operations or the product is discontinued, what can a customer do?

In most cases customers can retrieve their data but that still doesn’t mean they have a place for the data to go. If the shutdown happens to a cloud infrastructure product, it may be a little easier to shift to a similar one -- from Nirvanix to Amazon or IBM for example. Customers would need to select a new vendor, migrate their data and code, and test it ahead of the vendor shutdown. That’s a lot of arduous work that has to be done quickly.

Learning Opportunities

It’s much worse if it’s a platform-as-a-service vendor. Customer are tasked with finding another platform with just the right mix of languages and service on top of code migration woes. Painful. But less painful than when a SaaS vendor goes dark. When that happens, customers are in real trouble. Not only do they have all the agony of data migration, they also have to find a comparable system, somehow move the old data into the new applications’ data structures, and then train everyone on the new system, all the while taking the productivity hit that comes with learning a brand new system.

Can’t a customer protect themselves with a source code escrow agreement?

Not really. Source code escrow agreements -- where a copy of the software’s source code is kept with a third party in case the product is no longer available -- only allows the customer to continue to fix bugs. If a cloud vendor goes away, an escrow agreement won’t build a data center on which to run the software nor will it allow a customer to deploy software that they have never before run themselves on site.

There are no easy answers. Large enterprises may be able to write end-of-life protections into their contracts but that won’t make much of a difference if the company goes bankrupt. Having some plan for converting an escrowed copy into a functioning system will also help but is no panacea.

It’s not enough to rely on the biggest companies either. A number of vendors who have shut down cloud services this year are amongst the leaders in the industry including Google, and Dell. So far, no major SaaS vendor has shut down the most important enterprise applications such as a CRM system, but that’s no guarantee. Vendors will make decisions based on their own business needs which do not always align with the needs of their customers.

Ultimately, everyone needs a fallback position including smaller organizations. It’s best to always have an alternative vendor pre-chosen for mission critical applications and to know how to migrate from the current cloud provider to the alternate quickly. Running the same type of applications from multiple vendors also provides safety from the sudden shutdown of one of them, though there are obvious costs and integration problems associated with using multiple vendors’ applications.

The advantages of cloud computing -- flexibility, agility, keeping capital investments in IT low -- are real. Unfortunately, the risk of an unplanned shutdown is equally real. It’s important to mitigate that risk with proper planning no matter what size the organization is or how confident you are in the vendor.

Title image courtesy of Stuart Monk (Shutterstock)

Editor's Note: Interested in reading more from Tom? Check out How to Make Social Collaboration Features More Meaningful