Many small businesses are still uncertain about cloud computing and wonder if it can help boost profitability without being extremely risky. To figure it out, it’s best to start by defining cloud computing in small business terms. There are two commonly agreed upon types of cloud computing: 1) software-as-a-service and 2) infrastructure-as-a-service.
Software-as-a-service (SaaS) refers to cloud computing where the software you would normally install on your office computers is instead delivered over the Internet.
The most commonly recognised software application is CRM (customer relationship management). Last year 26% of spending on CRM was for SaaS versions, and this is expected to grow to 33% by 2015, according to Experian.
Infrastructure-as-a-service (IaaS) cloud computing is where you rent space in a data centre and use their servers rather than buying new hardware to run your business. A common example of IaaS is website hosting.
You may also hear terminology like “public cloud” or “private cloud.” Simply, the public cloud is where shared resources are used outside of your company and delivered over the Internet. The private cloud is where you build a shared infrastructure within your company and deliver services over the internal network to users within your company, without installing software on their individual systems.
Starting in the Cloud
Many small businesses that started in the last ten years may not realise that their business has already started utilising aspects of cloud computing – email and websites, for instance.
When an entrepreneur starts a business the first IT consideration, after buying that first computer, is typically setting up an email address, likely followed by setting up a web site. Purchasing a server probably doesn’t make it to the list for some time. In fact, 90% of small businesses do not own a server.
So where do small businesses go for their email service and website hosting? Usually to their ISP (Internet Service Provider) which includes it as part of a package. These are simply applications and shared resources delivered over the public cloud and fundamental to business operation.
As the business grows, it may make sense to purchase a dedicated server that runs the email and web servers – but initially, the business began in the cloud. And now, advancements in technology will likely take them back to the cloud. The need for expansion and flexibility coupled with increased cost control requires the smart small business owner to search for IT alternatives.
Over the past few years, cloud services have developed to a point where most, if not all, software vendors have developed and released their applications as a service. For example, consider the cloud products from Sage, Intuit and MYOB. Or, think about the expansion of Microsoft to include Office365 and a suite of hosted platforms for their communication and collaboration suite.
Then take cloud start-up companies that have gone mainstream like SalesForce.com. When you throw in heavy weights like Google and their Google Apps service, you can see the clear direction and evolution for cloud computing for small businesses.
On the flip side, we tend to hear a few arguments against cloud adoption, such as data security (as recently illustrated by Sony’s PSN hacking disaster), resources availability, bandwidth speed and cost, and general trust issues.
Availability of Resources
When small businesses were using their ISP for email and web hosting, were they concerned about email not being available? Perhaps it wasn’t an issue then. But now that they have experienced sluggish email systems or server overloads (after moving to their own dedicated server), there are some concerns that going to the cloud may mean more downtime due to a lack of control.
But a single server belonging to a small business may struggle to run the email, website, file store, backup, security management, finance and accounting packages – and to top it all off, in many cases, servers are managed by staff members with no formal IT training.
This means a server is prone to more downtime and instability than, say, an application, delivered securely over the Internet, hosted on a server farm with the latest equipment, and managed and maintained 24×7 by experts.
And what about the issues that can occur on a local server when one application provider updates their software? If that update doesn’t ‘play nice’ with the other applications installed, then your business could grind to a halt. Cloud services work independently, so software update conflict issues are a thing of the past.
When you consider the types of applications delivered via the cloud, some are more likely to be used by businesses that are most concerned about availability. Many applications have offline caching, meaning a copy can be stored locally and then synced later when online. So even if the Internet is not available, they can continue to work.
Endpoint security (the virus scanner on desktops, laptops and servers) is another application that could be a re-entry point to the cloud. It’s the management component and the threat databases that are stored in the cloud. The scanner still sits locally, so if a connection is not available your scanners can still defend against local threats. Keep in mind though that over 90% of threats today come via the Internet, so without a connection you are already potentially 90% safer.
Cost vs. Speed vs. Productivity
For many developed market regions, cost versus speed versus productivity is a concern that never gets raised. However, across Australia, New Zealand, Asia parts of Eastern Europe, and Latin America the cost and speed of accessing large amounts of information back and forth over the Internet are valid concerns.
Small business owners tend to be concerned about the availability of services as opposed to cloud-related issues such as security, data ownership and data privacy.
While this concern is true for many applications, the cloud should not be ruled out totally by small business purely based on these reasons. When applications like website hosting, mail server hosting, and computer antivirus and security are offloaded to the cloud, it can free up the resources on your network. This means the tools you leave onsite are free to perform better.
How often does a small business owner need to log into the management console of their security system? Let’s face it, daily email alerts and weekly reports are probably sufficient. And if an email travels through a server on the Internet versus locally, it still travels the same distance and at the same speed as it comes across the wire (except for internal emails. In a small business, it’s probably quicker to lean across the desk and talk to the person anyway.)
Is My Data Really Safe?
Securing data is a critical concern to service providers. Some countries have regulations that govern the storage and transmission of confidential information, not to mention the power of the customer to take their business elsewhere if bad press follows data breach.
Some businesses are also concerned with the location of the data centre. Is it in my backyard? Or, is it in some far-flung, low-cost country where government controls and infrastructure are not as well defined?
This is a very valid concern. How does a business truly know where its data is stored? The answer is, it probably doesn’t. That is the nature of the Internet. In order for a service provider to provide an always-on, always-available service, it needs to have multiple data centres with high availability and failsafe capabilities. So if something happens to one set of servers, the next set can take up the slack. In order to do this, your data is probably stored and shared in multiple locations, even in multiple countries.
You should be asking your service provider for the details about their primary and secondary data centres and if there are any redundancy plans. This will help you see where your data may or may not be stored. You then need to make a judgment call based on your level of trust in that provider from both an availability and security perspective.
Think about where your business has come from; what you require in terms of resources to take it to the next level; and how you plan to use technology moving forward. You’ll begin to see why research and general industry chatter predicts Small Business adoption of cloud computing will grow at staggering rates over the next 18 months.
The Small Business journey to the cloud is actually more of a round trip. It’s important to keep this in mind when you make your next IT investment decision.