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Startups omit in-house IT with Amazon Web Services

Amazon Web Services is enticing small businesses that anticipate growth to become AWS customers, but enterprises aren't as open to the new technology.

NEW YORK -- The Amazon Web Services cloud suite is still most popular in small businesses and startups, but a number of major corporations have begun to use AWS for parts of their infrastructure.

The Amazon Web Services summit here last week was awash with startup owners interested in AWS or current customers. The cloud services provider just wrapped up its AWS Global Start-Up Challenge, which rewarded startup organizations for "their originality and creativity, likelihood of long-term success and scalability" of AWS implementations.

"AWS is enabling startups," said Khushboo Shah, CEO of Cloudamize, a cloud optimization and capacity planning startup.

AWS might be particularly attractive to small businesses because it's inexpensive to deploy and allows companies to pay only for the resources they use. Those attributes led to increased cloud use during the recent recession. 

"The success of cloud computing is because it fell into an economic pattern that's actually been going on for many years," said Amazon Chief Technology Officer Werner Vogels during the summit keynote.

Economic uncertainty makes the dynamic resource model of the cloud enticing for startups that have a lot to lose. With the elasticity of cloud computing, no capital goes unused and organizations don't have to guess how much capacity they require. Plus, AWS and other services aren't money sucks if you fail at implementing cloud. 

"Cost of failure in the cloud world is close to zero" Vogels said.

AWS savings, security appeal to startups

Small businesses tend to adopt cloud computing more easily than enterprises because their needs are different and they embrace less traditional business models. 

"Smaller companies are more open to new technology," Cloudamize's Shah said. "For enterprises, cloud is a tougher business decision. There are many more business units."

Startup companies, in particular, are focused on growth. Since those organizations are intent on expanding, they choose cloud computing for its ability to scale.

Data processing is where enterprises will need AWS.
Lee BankewitzMovable Ink

Movable Ink, a New York-based email provider startup, deployed AWS for its scalability and storage savings. Engineer Olivier Lauzon said the cloud helped the company decrease host provisioning times and costs, and it reduced the amount of restarts IT had to do. 

"The cost of storage on the hosts we were using was prohibitive," he said. "Initially, it was mostly about savings, but once we were storing the data properly, we realized there was a whole ecosystem of AWS tools."

Small businesses also are drawn to AWS because those companies are less likely than enterprises to afford in-house security tools and encryption capabilities. AWS bundles in encryption features for which startups would otherwise have to pay a hefty price. 

"Especially for startups, having a good encryption infrastructure is really key," Lauzon said. "Enterprises are used to having that already."

Plus, enterprises are more bureaucratic and have internal politics that dictate cloud decision-making, said Movable Ink engineer Lee Bankewitz. That could prevent those companies from adopting AWS, but there are plenty of reasons enterprises might need the cloud. They can deploy cloud services to separate groups within the organization if certain divisions want autonomy and less interaction with IT, he said. "Data processing is where enterprises will need AWS," he added.

How enterprises use AWS

In speaking to prospective clients at Cloudamize, Shah said she's found that some larger enterprises have begun to warm up to the cloud, especially hybrid implementations. "I think they'll get there, they just have more requirements, so it takes longer," she said.

Application and deployment speed, in addition to ease of use, are key benefits of the cloud for enterprises. For large organizations, hardware savings also can be significant.

Redistributing capacity to use capital in the most efficient way is another main reason to implement AWS, said Joe Salvo, General Electric (GE) global research manager. GE, one of the earliest AWS customers, runs AWS GovCloud in research environments and developed CEED, an AWS-based collaboration and workflow management tool. "The thing that's important to me is speed," Salvo said. "When you're inventing something, people want it yesterday."

GE isn't the only big business that uses cloud computing. Industries including pharmaceuticals, healthcare and financial services also have adopted AWS. For instance, the Centers for Disease Control built a data-sharing platform on AWS that allows the public to view health trends and information about flu rates, Amazon's Vogels said.

Netflix runs its infrastructure on AWS. NASDAQ, another early AWS adopter, developed finQloud, a financial services cloud platform that helps users "manage data while meeting regulatory compliance requirements," Managing Director Scott Mullins said in the summit's keynote.

IT pros might be surprised to hear that much of the media they access every day also relies on AWS. Fox, PBS, Newsweek, ABC, The Washington Post and The New York Times all run AWS in one way or another. The media and advertising industry has a special interest in cloud because its revenue has dropped in the past decade and those companies need new ways to monetize their content, Vogels said. "Almost every large media brand you can think of is an AWS customer," he said.

Alyssa Wood is the site editor for You can contact her at

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