You catch 'em, we kill 'em

Cloud services = bad for business

, posted: 28-Jul-2018 14:05

Looking back at some old blog posts I find myself revisiting some of the things I said about cloud services being dangerous or potentially bad for business. A few years later I am more convinced of this than ever. Here is why:

When I talk about cloud services in this article I am generally looking at Hosted Software (e.g. Xero, Google apps, Dropbox, Microsoft Online etc).

1 - Dumbing Down: Using cloud services means you have to dumb down your environment. Why? Most cloud services are a set of functionality pitched at the masses. That means in order to provide their services they have to make everyone use the same functionality.

Now I have many clients and the one thing I know for sure is no two businesses are the same. Their needs for functionality, services and support differ. Their business models differ. Their workflow processes differ. They are unique and individual and the product / services supporting them also need to be individualized.  With cloud services you give that away. Your business is forced to fit the same mold as every other business using those services. With onsite software or bespoke systems you can individualize - using cloud services you cant (not at any meaningful level).

2 - Loss of control: Say you find a service that meets your needs. You invest time and effort into signing up for that service, training your staff, setting up security etc. All is well until someone running the cloud service decides to mix things up. They add new functionality, or worse remove and change old functionality. They add unwanted add-ons. They change layout.

Most of the time this type of change is driven by marketing, the requirement to look modern and trendy. Some bright person has an idea of how to improve the systems so they alter it. The problem is it then breaks what you are doing. Staff need to be retrained, functionality doesn't exist any more, errors are added or what is most common - prices are hiked. Here are some examples I have encountered.

i  - Freshbooks. The online invoicing system I use. I signed up to use it as it let me track time on my phone, push a button and send an invoice immediately. It saved me truckloads of time and meant I trapped my time efficiently and got invoices out promptly. Then they got ambitious and decided to become a full invoicing system. Version two was put out resulting in:

  • A) Price hike. Doubled my prices while reducing my efficiency. Told it was for my benefit. Hmm funny but I don't feel benefited.
  • B) Pushed to new version that had flaws - reverted back but getting pushed to upgrade. I know my time is limited on version 1 (support will stop) - and version 2 doesn't work. Thus i am going to leave.
  • C) The new version is a triumph of trendy over sensible. Users are listed by last viewed (not last name or first name) with no way to remedy that. Trying to find anyone is a disaster. Invoices ditto. Three to five clicks to add a new time entry. The new app fails on the phone.  It is now unusable.

ii) Updraft backups. One of the most awesome backup systems for Wordpress -until they changed it. Our subscription went from an unlimited subscription to 35 license unless we take a 70% price hike (and sign up for a new version that has muck in it we don't want or need). 70% !!!!  Wow - that hurts. (Did I mention the 50% Freshbooks price hike, the 1000% Log Me In price hike, and all the other hikes that happened this year?)

To add insult to injury now they track my license for each install - but if I drop a site (e.g. take a backed up dev site and send it live - deleting the dev version) I now need to get them to manually sort out the licenses on their portal (three support calls in the last month - all failing to resolve my issues). They added in functionality to make them more money but their support issues are rising. My 35 licenses have 28 used and only 3 available. Yup - you saw right - their math is messed up but I cant fix that either. What is happening is I'm having to spend more time managing, more time on support calls and now more time contacting them to do stuff I shouldn't need done.

3 - Loss of support: Cloud services run on a high turn over, low margin model. That means they have to sell lots making pennies on the dollar. It is a bad business model for support. Support is expensive. When developing software what most folks don't realize is the cost of writing the software (which is scary) is nothing compared to the help and support required over the first year or two and the ongoing support costs. How do you continue to make money with low margins? Cut your support. Most support on cloud services is either community forum, pushed off to email / contact forms (then lost) or people on telephones (rarely) with incomprehensible accents who don't understand your needs and if they did don't have the power to resolve your issue.

This costs money - yours!! Down time, loss of productivity, missed sales etc - it all adds up quickly but it is you who pay for it - not the provider.


4 - Loss of security: When we entrust our data to cloud services we entrust them with the security of our information. Google has just announced they wont scan business account emails to serve you adverts any more. But they used to. Facebook - well lets not go there - it's like sucker punching a baby when it comes to hassling them about security and privacy issues.

More and more services are using authentication systems relying on Google, Facebook or other authorization systems. You have seen them - Log in using Google, Facebook / Twitter etc etc. Microsoft's infrastructure now uses that cloud based single login system for office, your computer's operating system and a raft of other services. That's putting all your eggs in one basket.

Conventional wisdom tells us to use different passwords for different services but the above authorisation model breaks that. Even password systems storing your passwords online aren't safe. The breach of online password systems has opened millions of people up to have their bank accounts, emails, vpns, servers and goodness knows what else compromised.

5 - Loss of profit: cloud services, especially support, are run in other countries on the whole. Facebook, Google, Microsoft, Twitter, Amazon, Dropbox etc etc etc all have their profit going somewhere else. Now that may not matter to you directly but the billions of dollars going out of the country mean there are billions of dollars not being spent here in NZ. That means there are billions of dollars less in consumers pockets, which means they are less likely to buy from you.

I could take a couple of tacks talking about this - the patriotic, "Buy NZ" / "Keep it kiwi", or the social justice "yes it gives the poor jobs but that only hides the fact that some rich dude is sitting on billions earned from sweat shop labour and exploitation" but instead I'm going to appeal to self interest.

Cloud services are unsustainable if we want to keep our standard of living. Not only is it siphoning off billions for the benefit of very few but it's dumbing down business and services. A few years ago the idea of waiting on the telephone for hours to get support was unthinkable - and now it is accepted as common place. It is the end result of the low margin high turn over, save money by shipping it over seas model.

But even that travesty of support is being replaced by the push it off to contact forms, community forums and chat session - where you wait for minutes to get a single reply as the operator is not concentrating on your issues but jumping badly between 4-10 different chats at once - consequently completely messing up your call. Cloud type services are at the forefront of this model.

Ask yourself - can you continue to run your business well and have a reasonable standard of living if you have to use systems you don't own, submit to arbitrary changes that don't benefit you, get prices hiked once the competition is destroyed in the price war and support is no longer given on a product that is designed for the average statistic - not for you?

The growing trend is cloud services are hiking prices, they are dumbing down functionality (changing subscriptions to give less so you have to pay more by upgrading to what you already had), pushing off support and increasingly going under as the giants stamp on the competition through price wars.

Ask yourself - what is the liability and exposure I have with the cloud services I am currently using? What does that mean in direct and indirect costs such as:

  • Price hikes
  • Staff training
  • Data Loss
  • Changing to another provider if this one fails
  • Uncertainty over functionality ongoing
  • Lack of contractual agreements for SLA and support

For myself, I do need some cloud services but I am paying truckloads more for NZ based, support driven, local systems governed by our countries laws. It does cut into my profit margins but I do sleep better at night and give better service to my clients because of it.

The IT industry is getting gutted by cloud services - programmers, support staff, testers etc - all compete against the $5 per hour overseas models. The quality of software and services are falling and it is not just IT who are suffering. Manufacturers are going overseas, support staff are going overseas and increasingly any job that is does not require physical presence is going overseas.

It is driven by one thing: Money. We hate spending it so we choose the cheap options. Try buying quality now. Even if you have the money you generally cant get quality or you need to get it from over seas. But our desire to save money is penny wise and pound foolish. Even our fruit and veges are coming from else where- making us more vulnerable, removing cash flow in NZ and messing with our quality of life.

Cloud services are the poster boy (girl) for this issue. They might be cheap to buy now but what is the real cost?

Last thought: Business is war. Literally.  It is a competition for the largest share of a limited pool of resources. That war is fought at a personal, community, city, nation and corporate level. Whose army are you funding? Are they on your side and do they have your interests at heart? Will they offer you reciprocity and help you flourish or are they just after your dollar?



Other related posts:
Modern Web Trends = Bad business
Penny wise, Pound Foolish - The Google Trap.

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Shane Hollis
New Zealand

Shane started Virusbusters twelve years ago to provide fixed price IT support for home users.

Daily battles through the world of viruses, spammers and other malware has left an indelible impression on him so he decided to try to give back some of the help he has received over time.

Hopefully crazy ideas, virus removal tips and other help can be found in this new blog. who knows, it might even be worth reading one day.