Most if not all startups and companies use external service providers to be able to offer their products and services. Having your servers in the cloud with AWS, your company’s email through Gmail, your databases with MongoDB or any other 3rd party extensions shows to which extent we have become reliable to their services to be able to provide our own services. When the Amazon cloud goes down, we go down.
This is critical to keep in mind. Today we can create a company and product faster by leveraging a large number of existing components that don’t need to be reinvented. This allows us to get to market faster and to ensure we spend our resources more intelligently. It also helps us focus on what is truly proprietary to us and invest most of our time in our differentiation. We also reduce costs as it would be extremely expensive and complicated (or even impossible) to try to replicate some of the functions offered by different providers. In one hand, this is a big advantage. There are many parts of our infrastructure that we don’t need to worry about. On the other hand, by using these services, we are somehow putting our fate in the capabilities and reliability of others. We need to be mindful of this reality and try to take extra steps to minimize our dependency when possible.
In the case of AWS, it is always a good idea to have several servers in different regions so if one region goes down, you can switch to another server farm and continue servicing your customers. To take this one step further, it is good management to always have some additional backup alternatives with other providers in case the current one can’t continue to offer the services you need.
This is one the reasons why for critical functions, you want to make sure that your counterparts are solid and have the resources to provide you with what you need in the long run. You don’t want to bet on an upcoming startup for some very critical part of your infrastructure. And if you do, you need to be conscious that you should try to find an alternative. If this is not the case, you are then betting your future on someone else fate and that’s dangerous. You also want to see if your partners are nimble and know how to evolve with new technologies. Ideally, you can monitor how and when they release new features and to which extent they pay attention to the evolution of the market.
This idea doesn’t apply only to startups and other IT companies but to any companies operating a business. We must always be diligent with the way we select and work with our providers and understand the risks we are exposed to by taking specific outsourcing decisions.