'The biggest risk of cloud is bankruptcy,' warns expert panel

Just because a provider has impressive revenue numbers doesn't mean they'll be around for the long haul

The biggest risk of moving applications, data and services into the cloud is bankruptcy, according to a panel of experts speaking at a recent Computing event.

Speaking at the Cloud and Infrastructure Summit, Simon Hazlitt, co-founder and relationship manager at financial services firm Majedie Asset Management (pictured), explained that cloud providers going bust presented a huge risk to businesses looking to outsource to them.

"The biggest risk of cloud provision is bankruptcy," said Hazlitt. "With most outsourcing deals you can spool your resources back in, but it's trickier with cloud. And if a receiver comes to you and asks you to pay a second time to access your data [when you've already paid the cloud provider], that's potentially a big cost to the business."

Hazlitt added that working among financial experts was a boon for someone looking to use cloud providers, as he could ask one of them to look over a prospective supplier's balance sheets to check on their viability, and likelihood to survive.

He explained that simply checking for strong revenue was not enough.

"I asked one of my fund management colleagues to examine the balance sheet of some our cloud providers. Tech people don't really get the numbers. Revenue is fool's gold, it doesn't mean they're going to survive. You've got to be careful because we're in the 'land grab' phase when it comes to cloud."

Hazlitt was referring to the huge costs incurred by some cloud providers in setting up their businesses and acquiring customers, in the hope that they will become profitable in future.

"[Cloud providers] are all underwater in a financial sense, so you've got to be really careful in terms of picking your partners. There are lots of risks."