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If you want to know why these issues of ratings and insuring continuity are important, I direct the reader to this article about on-line file hosting site Carbonite.
I am going to write about a project that got stranded on my research pile when a well funded client decided that they did not wish to complete the contractual research allocation. The research directives encompassed finding a preliminary business model for underwriting business continuity risk within the rubric of cloud applications and hosting services. A concomitant directive was to research new and existing technological models that would offset the risk of such underwriting programs.
So there was an insurance underwriting and actuarial side, and a real systems side. I was to uncover the insurance industry's perspective on underwriting SAAS /PAAS / Cloud, etc. I was to bring to the partner underwriters technical proposals that would offset the risk. The project was on a roll and then still birthed. I think it still has merit. I think that the failure of several VC funded net storage start ups points to this, and that even recent hours-long outages in the 'clouds of the mighty', should indicate that this analysis was not a complete waste of time. I certainly uncovered gaping holes in the standard insurance industry lines when underwriting business interruptions and continuity for advanced hosting and SAAS.
I am under NDA as to the identity and specific plans of the client, but what I learned, and the contacts I made, cannot encumber my portfolio of analysis and career endeavors. I have that in writing, and the former client, admitting to the invocation of an early termination clause, is cool with that - bigger crises on the home front and all.
We analysts wouldn't be worth much if we couldn't (at least sometimes) feel things coming 'round the bend. Before the words "economic crisis" became a meme for all subsequent business failures, many esteemed colleagues felt there was excess capital flowing into redundant business models (YASN and YAVSS, for the initiated). This was an evil wind with bad portents. Too much VC cake was handed over to the 'Valley Undertakers", i.e., entrepreneurs who had fostered serial failures, break-evens, and maybe one or two small M&A's, but who in the big picture had no business getting that much access to capital. So that's the tableaux we have set at around 3/07.
I was working for an R&D lab in South San Francisco when my self-billed services (product strategy under contract) started softening. I was counting on an implied renewal to extend a six month term to 18-24 months. Well, they said they loved me.I was not alone in the exodus from Gateway Blvd.
I also had several quotes out around the Valley, and performed several live pitches for real make-money product strategies based on bedrock research. But something was in the air, a whiff of fear in the faces of those I was pitching, even at the most august institutions. I've always been a realist, and this was well prior to the words 'economic meltdown' becoming CNBC's daily mantra. Many of my analyst-contractor colleagues in the Northern CA high technology sector also started to feel the chill.
So it happened to me a little before it happened to many of you. Despite accolades for the stellar work I performed, my contract was not renewed, and all my pitches and proposals in and near the city of San Francisco were not closing at the usual pace I was accustomed to. Until 2006ish, I could close in a month or two. Now in '07 I was being braced by the clients to be ready to sit on contracts for up to 90+ days. One of them closed and was aborted after 120 days. That project, hosted solutions business continuity underwriting and preemptive outage prevention, was a real money machine, with potential users, a realistic existing market model, and had reality baked-in. You get the idea. Sound business models are sometimes not enough when fear is in the air.
I researched market strategies for services offerings to rate, certify, and offer business continuity solution services for....."The Cloud". I want you all now to recall that in late '06 mid '07 "cloud" meant many things and had not yet gained that buzz cachet that it has now.