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I spent 12 years at Microsoft. He spent the first few years leading a team that worked on the SQL Engine (providing various storage features for SQL Server 2005 and 2008). Then, in 2008, I joined an incubation team that was just starting to work on a cloud version of SQL Server, which eventually became Azure SQL Database. It has been an amazing experience to be a leading part of the SQL Server team (and Microsoft in general) journey to the cloud. After more than a decade at Microsoft, I joined SingleStore, which was primarily an on-premises company at the time, but has since evolved into a cloud company with strong cloud revenue growth.
In today’s service-oriented economy, companies of all sizes are moving to the cloud.
If you’re not a cloud company, your multiple will be very low. Clearly a cloud company, Snowflake’s valuation rose as high as $88 billion. But Couchbase was valued at around $1.2 billion on its Nasdaq debut.
But even if you’re not a cloud company, if you can successfully jump to the cloud, you can increase your value dramatically. After Teradata embraced the cloud, its stock doubled.
There’s a reason the cloud is a better way to evaluate a business. The cloud offers better economies of scale. Cloud companies benefit from the strength of the cloud ecosystem. Cloud technology makes it easier to tie things together. And many customers are now in the cloud, so as a cloud company, you can offer better experiences to those customers.
So if you’re trying to build a great product, you should build it in the cloud. Here are three things you can do to make the most of the cloud for both yourself and your customers.
Build the right infrastructure
Deployment in the cloud is significantly different. Customers expect that getting started should be quick and easy. Don’t let users go through too many steps or make too many decisions to get started. Set smart defaults and build the system to adapt to user behavior over time. The fewer buttons you have, the better the customer experience. If the customer needs to make a configuration choice, make sure you have a telemetry system to see what they chose and how it works. That way you’ll know when something isn’t working and can use that information to make smarter default decisions.
This also affects how you approach administration and monitoring. With the on-premises model, a customer would call you if they had a problem. But with the cloud, you can find and fix many problems before customers even notice.
Operating in the cloud also means that your teams should establish authorization and control mechanisms for your product. Without the right controls, it can become problematic. A colleague once told me he’d seen this firsthand on Google, where BigQuery users used to be charged based on the number of queries they ran. A student once filed $2 million in fees overnight.
Familiarize yourself with the features that make sense in the cloud
Brainstorm the things that are only possible in the cloud or are greatly improved by the cloud. Create a cloud migration plan that defines what data should be moved to the cloud and when, so you can best differentiate yourself from the competition and optimize your cloud success.
Elasticity and on-demand pricing are things that people don’t always think about with on-premises deployments since it takes a long time to get more hardware. But in the cloud, additional hardware resources are just a click away. Scalability is one of the benefits of the cloud. So make sure you have the underlying architecture in place so customers can get more capacity or turn the dial down and pay less.
From a database perspective, one of these cloud-specific features is the separation of storage and processing power. This allows you to support high-performance reads and writes for the working set (your hot data) but have a low total cost of ownership for your cold data. This gives you the best of both worlds without the added administration overhead. The system simply moves the data to where it is needed based on how you use it. This approach is only possible if you have access to very large object stores such as Amazon Simple Storage Service (Amazon S3) and Google Cloud Storage (GCS).
The cloud can also enable enriched experiences through sharing. Google Sheets is a good example. As you move to the cloud, look for ways to improve the way people work together.
Integrating your database with cloud-only features from cloud ecosystem players can also make your product more secure, feature-rich, and/or effective than it would otherwise be.
You can also use the cloud to offer higher level service guarantees. If you’re running a database on faulty local hardware or someone else’s hardware, you can’t deploy a five-nine Service Level Agreement. On the other hand, if you work in the cloud and control the environment, you can offer and deliver better guarantees.
Deploying local or geographic failover in the event of a widespread disaster requires an off-site physical data center. This is prohibitively expensive for all but the largest companies. The cloud offers this capability in almost every region of the world for every customer at a slight increase in cost.
Change the culture of the team
Imagine moving your toaster business to the cloud. Instead of selling toasters, choose to use the cloud to offer toasters as a service. But maybe customers don’t want to deliver the bread or care about details like toaster capacity. Maybe they really want the toast. Think about it and find out how you can meet such customer demands.
Successful cloud organizations must also develop teams with the intuition of how things work, how they fail, why they don’t scale, what will be difficult to support, and how to monitor.
Your product teams need to understand how the cloud works to build the products. Offer your product teams training that gives them the tools they need to understand the cloud.
Site reliability engineers (SREs) are also critical for cloud companies. Your job is to keep your service running. SREs should understand automation and have experience with cloud providers. There is no substitute for experience building cloud-distributed systems.
You also need specialized skills, including backend engineers, to build an API. This is important because cloud products should be built on top of an API, not just a UI. APIs are valuable in that they can unlock new business models and revenue opportunities, enable integration, resource sharing and reuse, and reduce time to market.
The cloud offers companies and their customers many advantages. But becoming a cloud company isn’t just about running your on-premises product in the cloud. It requires changes to your organizational structure, your technology, and your culture. These aren’t easy changes, but the benefits are worth the effort.
Rick Negrin is VP of Product Management at SingleStore.
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