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When NOT to Use Cloud?

July 7th, 2010 3 comments

During the July 4th long weekend, I got the chance to read the book “Delivering Happiness” by Tony Hsieh. It’s a great book with many great ideas and lessons he learned from LinkExchange and Zappos.

So, how does this relate to cloud computing?

Here’s what Tony wrote…

“It was a valuable lesson. We learned that we should never outsource our core competency. As an e-commerce company, we should have considered warehousing to be our core competency from the beginning. Outsourcing that to a third party and trusting that they would care about our customers as much as we would was one of our biggest mistakes. If we hadn’t reacted quickly, it would have eventually destroyed Zappos.”

In this paragraph Tony summarized the lesson from contracting eLogistics for inventory services in Kentucky, which turned out to be a mess and almost killed Zappos when cash flow became a big issue.

From a business perspective, cloud services are not much different from the inventory services. Both are all about outsourcing. The high tech nature of cloud doesn’t change the business nature of cloud services. What happened to Zappos could potentially happen to any cloud customers.