What the Cloud Means for Small Business

92% of users feel email is important or critical in helping them get their work done and 75% of all communication is sent by email.

In an already jargon laden industry, it strikes me as comical to brand the next big revolution in computing as “Cloud” computing.

I speculate it came from our friends in the marketing department, after all, what better way to describe a hyper complex, highly specialized, and esoteric new system of computing? Ironically, the “Cloud” does accomplish its goal of packaging all those moving parts into one tag line, however, it is also a great adjective for many consumers’ comprehension of the technology. Minus the buzzwords and the amalgam of confusion, lets just say, for small businesses everywhere - Cloud computing is a game changer. Here’s why...

If you have taken the red pill, you have found your way to the truth about cloud computing and will begin your journey with me with a quick description of the technology behind the “Cloud”.

What is the Cloud, really?

Let’s start with the very familiar and probably most widely consumer adopted use of cloud computing, Software as a Service (SaaS). You will find the majority of the paid or free services on the web rooted in Cloud-based technology. Of course, I am speaking of services like Gmail, Google Docs, DropBox, and Salesforce. All of these services provide a front-end application to their base without the need for their customers to purchase any specialized equipment or software. The backbone allowing this to happen is considered cloud technology. In many instances the backbone of SaaS is made up of a cluster of highly expensive enterprise level Web and Database servers, all of which are painstaking interconnected and redundant for the ultimate satisfaction of achieving 100% up-time. It is estimated that another well-known cloud (SaaS) company called Twitter could be exposed to as much as $25 million dollars in losses per minute of downtime. This is based on revenue from ads on their 500 plus million users.

The beauty that allows SaaS to achieve the uptime and scalability necessary to service millions of users is grounded in virtualization. IT professionals have the ability to run multiple single-purpose servers, virtually on one physical hardware box. The initial appeal of this technology was first realized as a way for larger organizations to vastly reduce their datacenter footprint by way of consolidation via server virtualization. In 2007 and 2008 this also meant companies could take advantage of green energy tax credits, as they were able to reduce their carbon footprints by as much as 50%. Later, as the technology advanced, new methods of high-availability came into play and suddenly, IT professionals could keep a service like Gmail running without the worry of hardware failure crippling the system. So, as you can see, Cloud technology’s initial appeal for many established companies came in the form of cost savings through consolidation and server availability. New and innovative companies realized the potential and started building systems designed around hosted consumer based applications, giving rise to services like Salesforce and Google Docs.

I believe SaaS will be evolving rapidly in the next few years, and we are already enjoying the benefits in our every day lives of which many are hidden. The next major iterations will most likely be in full cloud based operating systems. Truly the “sky” is the limit.

Moving on to the next most used cloud based service among businesses is infrastructure as a service (IaaS). Instead of using the developed application-only infrastructure as a service allows its customers to take advantage of a completely hosted server infrastructure model. For example, if you are a bio tech startup and require specialized computing to sequence a genome, which requires a large amount of computing power, you would lean on IaaS to build the infrastructure necessary, easily and affordably without the need to purchase and maintain a large server farm. Once your biotech company is finished with sequencing, you would simply decommission the infrastructure and no longer pay for the service. This type of system is a true pay-per-use model in which you dial up or down computing resources as necessary. The IaaS model has found its place with companies subject to seasonal business fluctuations and more importantly business that are starting and need their capital to fund their mission and not their infrastructure. As prices decrease with time, the availability and applicability for businesses to adopt this type of cloud based technology as a permanent solution makes much more sense both financially and technologically.

I have provided two of the most widely used cloud based consumer uses, I have explained what it means to be in the cloud, and I have provided consumer based applications examples for each use. When I reach out to small business owners, I make sure I find a cloud based solution that fits within at least one segment of their operations. It is not good enough just to "fit" a technology in a business operation though, the service or product must meet some basic criteria before we adopt. Most significantly we require the technology either save money, provide process efficiencies, enhance conveniences, increase reliability, etc, etc,... and wouldn't it be nice if it could do all of those things!

Do you need the Cloud?

At the heart of this document the fundamental question begs to be asked. How can cloud computing benefit your organization? Let me preface by saying most applications of cloud computing for business use are still in early adoption phase. This means companies are still testing the waters and exploring benefits. I see the technology industry moving in the direction of increased cloud computing, because as I mentioned previously, the benefits to large organizations and startups greatly outweigh the costs of the traditional model. Emergence in the cloud can be as simple as a few key applications at first or you can decide to move your entire network. It is my opinion that eventually your decision will be made for you, as more software vendors are taking advantage of reoccurring revenue and hosting their software to offer as a service instead of a product. Purchasing software will eventually become reserved for large organizations that require the control of ownership.

Why are some SMB organizations moving to a cloud model? What benefits are they seeing that inspire them to change?

Most small business owners I have spoken with, regard IT as a necessary evil. Obviously, I am not one who would agree; IT has paved the way for young organizations to compete with larger better-funded corporations. Now, I think what they mean to say is they don’t want the headache of managing an IT department, nor do they love the worry of having their system vulnerable to downtime. So I believe most business owners view IT as a variable on their balance sheet and a point of fragility for their operations. Take email for instance, 92% of users feel their email is important or critical in helping them get their work done and 75% of all communication sent by a typical user is from email. We are all aware when a critical function like email is down it affects our entire business and possibly our bottom line.

So is it any wonder small business owners consider IT an evil? I submit it is their fear of the unknown, their dependence on their systems, and their reliability on one person or an outsourced vendor to make it all work, that causes their anxiety. It is this reality that makes the cloud such an attractive option for most owners. The cloud can help you scale your business by paying for what you use at the time you use it, provide tremendous accessibility options for remote or mobile users, and allows for a company to grow without the need for large capital expenditures. However, as I have just detailed, quite possibly the most important benefit for small business owners is the knowledge their company has a reliable technology backbone, their data is safe, they do not have to worry about upgrades and updates, and their key programs and files are accessible when they need them.

SMB businesses I see moving into cloud computing range from start-ups with little cash to well-established businesses with antiquated software and a host of manual processes. Both are looking to the cloud, but for different reasons. The startup needs to save cash and prove their business plan, while the mainstay SMB Company has a need to upgrade software and processes providing agility for growth. In both cases IaaS, SaaS, or a combination of both can be used to achieve their individual goals. While they have different reasons for adopting cloud technology, the fact remains, they both chose the cloud because of the inherit scalability, reliability, and accessibility it offers. Advancements in cloud technology only solidify its presence in the industry and increase its viability as a market solution. You may be asking yourself, “What’s the catch? Why isn’t everyone running to this technology?”

Keep checking back, as I address this and many other concerns cloud users and IT professionals have about the technology.