Another cloud services provider seems to have closed up shop. NetworkWorld reports that MegaCloud.com, a consumer cloud storage provider has been inaccessible. Users started complaining on social media that they have not had access to their data since at least October 30th. (rb- there is likely lots of enterprise data as well. FierceMobileIT reports that 72 percent of workers are using free file-sharing services without authorization.)
MegaCloud had offered customers up to 8GB of free cloud storage, with another 8GB of free backup storage. That 16GB of free cloud storage was one of the largest giveaways of cloud storage from a consumer cloud provider. MegaCloud offered a desktop client, as well as mobile apps for Apple (AAPL) iOS, Google (GOOG) Android, and Microsoft (MSFT) Windows phones.
At the end of September, San José, CA-based Nirvanix cloud provider gave their mostly business customers 2-weeks notice to get their files back before they went dark, taking all the data with them. There are reports that Nirvanix hosted around 40 petabytes of data. Getting their data out in time must have challenged Nirvanix customers.
Charles Babcock at InformationWeek explained in an intriguing article that data movements in the cloud are dependent on the speed with which the service provider can write data to an external source and the amount of bandwidth made available to do so. He cited tests by Nirvanix competitor, Nasuni, which found that moving 12 TB of data from one Amazon (AMZN) S3 bucket to another took four hours. Moving the same amount from Amazon S3 to Microsoft Azure took 40 hours, and from S3 to Rackspace (RAX), just under one week. Moving data from Rackspace into Amazon took only five hours.
In a Data Center Knowledge article, Gartner (IT) analyst Kyle Hilgendorf reinforces my point that cloud meltdowns should prompt cloud users to get serious about contingency planning. Gartner’s Hilgendorf wrote in a blog post:
“Cloud exits are not nearly as sexy as cloud deployments – they are an afterthought … It’s analogous to disaster recovery and other mundane IT risk mitigation responsibilities. These functions rarely receive the attention they deserve in IT, except for immediately following major events like Hurricane Sandy or 9/11.”
“If you are a customer of any other cloud service (that is basically all of us) – take some time and build a cloud exit strategy/plan for every service you depend upon,” he added. “Cloud providers will continue to go out of business. It may not be a frequent occurrence, but it will happen. ”
Nicos Vekiarides, co-founder and CEO of Natick, MA-based cloud storage provider TwinStrata told NetWorkWorld that in the long-term, the economic draw of the cloud should overcome the fear and hesitancy of many businesses considering cloud storage solutions He predicts that the shut-downs will drive businesses toward larger, better-known cloud storage brands instead of to smaller, newer providers. He says:
The storage needs of businesses haven’t gone away. Organizations’ data storage requirements still are growing at 40 percent to 60 percent a year … What will change is how CIOs shop for and deploy cloud services, in that everyone still wants choice, but they’ll be much more wary. There’s always the need for choice among a number of vendors, and CIOs will want the best of breed. That might mean they will gravitate toward more established vendors.”
rb-
These events may put a few firms off the cloud, but not all. These events should point out the need for due diligence when planning what to do with their data.
Barb Darrow at GigaOM said it most 
poetically, “cloud storage offerings have multiplied like rabbits over the past year, and the notion that you could entrust business data to a company that appears to be well-funded only to see it shutting its doors could be more paranoia-inducing than the NSA spooks.”
IMHO, continuity plans need to account for data in the cloud. Cloud providers can offer better availability and redundancy, but still pose risks. But do they guarantee your data? Continuity plans need to protect complete business services, including parts that may rely on a cloud piece. Some of the questions I would ask:
- Does it make sense to have all data in the cloud?
- Is the firm’s data categorized so that when another cloud provider folds, IT can spend any time they have moving data to another provider? Mr. Babcock demonstrated that move would not be instantaneous.
- Can the data even be brought back in-house? Did you throw out your old SAN when the data was moved to the cloud?
- What format is the data in? You did check your contract right?
- Will a firm going under even worry about contractual obligations?
- Can IT and legal get together to make a deal with another cloud provider fast enough?
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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedIn, Facebook, and Twitter. Email the Bach Seat here.
