Nirvanix collapse is not a cloud failure

The cloud service Nirvanix announced this week that it was closing its doors, and directing its customers to take their data elsewhere. Now, people are claiming this is a failure of cloud technology.

Let's be clear: the problems caused by Nirvanix are not a failure of the cloud. They are a business failure for Nirvanix and a supplier failure for its clients.

Business rely on suppliers for many items. No business is totally independent; business rely on suppliers for office space, computers, printers and paper, electricity, accounting and payroll services, and many other goods and services.

Suppliers can fail. Failure can be small (a delayed delivery, or the wrong item), or large (going out of business). Business must evaluate their suppliers and the risk of failure. Most supplies are commodities and can be easily found through competing suppliers. (Paper, for example.)

Some suppliers are "single-source". Apple, for instance, is the only supplier for its products. IBM PC compatibles are available from a number of sources (Dell, Lenovo, and HP) but MacBooks and iPads are available only from Apple.

Some suppliers are monopolies, and therefore also single sources. Utility companies are often local monopolies; you have exactly one choice for electric power, water, and usually cable TV.

A single-source supplier is a higher risk than a commodity supplier. This is obvious; when a commodity supplier fails you can go to another supplier for the same (or equivalent) item, and when a single-source supplier fails you cannot. It is common for businesses to look for multiple suppliers for the items they purchase.

Cloud services are, for the most part, incompatible, and therefore cloud suppliers are single-source. I cannot easily move my application from Amazon's cloud to Microsoft's cloud, for example. Being single-source, there is a higher risk involved with using them.

Yet many clients of cloud services have bought the argument "when you put something into the cloud, you don't have to worry about administration or back-up". This is false. Of course you have to worry about administration and back-up. You may have less involvement, but the work is still there.

And you also have the risk of supplier failure.

Our society chooses to regulate some suppliers. Utility companies are granted monopolies for efficiency (it makes little sense to run multiple water or power distribution networks) and are regulated to prevent failures. Some non-monopoly companies, such as banks and electricians are regulated for safety of the economy or people.

Other companies, such as payroll companies, are not regulated, and clients must examine the health of a company before committing to them.

I expect that cloud services will be viewed as accounting services: important but not so important as to need regulation. It will be up to clients to choose appropriate suppliers and make contingency plans for failures.