Amazon Just Confirmed My Biggest Fear About Cloud Applications Amazon just upped it's Prime membership 20 percent, because who's going to do anything about it? Tony Soprano would understand the market dynamic.

By Gene Marks

entrepreneur daily

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Leon Neal | Getty Images

Do you have concerns about cloud based applications? You should. But not for the reason you're thinking.

If you're like most of my clients, you're probably thinking about security, right? You're concerned that your data is at risk. You're not 100 percent comfortable that the people hosting your data are doing everything possible to safeguard your information. When you hear about all those breaches and hacks, you think to yourself "Oh no, what if that happens to me?" Could your cloud based provider be more secure than all the giant companies -- even government departments -- that have fallen victim to malware attacks, data loss and theft? You just don't know.

It's a reasonable concern. If your data is breached or stolen your business could be shut down for days, even weeks. You could lose important information that you need to run your business. You could lose confidential data about your employees and your customers. You could be exposed to expensive lawsuits and negative publicity. The issue is vexing because it has a great impact on your business.

But, guess what? There's another problem with your cloud application provider that's even bigger, more costly and potentially more harmful to your business. If you haven't figured it out yet let me offer you a one-word hint: Amazon. Last week, Amazon officially raised the annual cost of its Prime membership from $99 to $119. Does that sound like a big deal to you? Oh, it should.

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No, the 20 bucks a year isn't a big deal. The big deal is how easy it is for Amazon to do this. Sure, the move made news and there were smatterings of online protests. But in the end, all we can say is what Tony Soprano used to say when something happens that's not in his control: "Whaddya gonna do, eh?"

Sure, we could cancel our Prime memberships but that's unlikely. By now most of us are addicted to the service, enjoying the free shipping and all that free content (psst…watch Fortitude, you'll love it!) as well as all the other amazing benefits (discounts at Whole Foods? Yes, please!) that hypnotize us into submission. The executives at Amazon know this…and love it. With a single press release, the company just created an additional $2 billion in annual revenues for itself. Sweet, right?

But scary, too. Because what happens when your other cloud solution providers do the same? Let's say you've spent hundreds of hours, and thousands of dollars, migrating your accounting, inventory, order entry, human resources, design, customer relationship management, project manager and whatever other system you have to that awesome online application. All of a sudden, just a short period later when your employees are all happily dependent on their servers in their cars and from their homes on their iPads and laptops, the vendor, like Amazon, decides to just up your price 20 percent?

You're stuck, my friend.

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Sure, you can complain, but who's going to listen? Yes, you can move to another service but -- assuming you can even extract all of your data -- do you really want to go through that headache again? And are you really solving the problem? Admit it: like all those Amazon Prime members, you're just going to complain and pay. Amazon Prime is only costing an extra twenty bucks a year. A business system may cost you that amount per month per user. Or much more. You're concerned about hackers stealing your data? You may want to be more concerned with software providers stealing your money. Whaddya gonna do?

Do you have any recourse? Not really. You can try to negotiate a long-term fixed pricing arrangement but c'mon. You're just a small potatoes small business. What leverage do you really have? You can scream loudly and maybe get customer service to authorize a six-month stay of execution, but that's just a short-term answer. I've been selling cloud-based solutions now for going on 10 years. When clients tell me they're concerned about their data I'm always telling them they should be more concerned about their pricing. Like Amazon, your software vendor's got you in a corner.

Where's Tony Soprano when you need him?

Gene Marks

Entrepreneur Leadership Network® VIP

President of The Marks Group

Gene Marks is a CPA and owner of The Marks Group PC, a ten-person technology and financial consulting firm located near Philadelphia founded in 1994.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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