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Demystifying the cloud for SMBs


Posted on June 23, 2011, Gerard Szatvanyi, President and CEO, OSF Global Services

If you’re like most small to mid-sized business, limited budgets and a small IT staff can hinder your ability to create and manage an IT infrastructure that supports your growing business. Cloud computing may help you address this problem by delivering easy, affordable, web-based access to computing resources and IT services.  And you’re able to scale these resources up or down based on your needs.

Simply put, cloud computing can eliminate the need for you to procure and maintain application software or an IT infrastructure. Instead you purchase web-based access to these resources through a subscription-based pricing model.  Google Apps, Skype, Agilewords and QuickBooks Online are examples of popular cloud computing services for small businesses.

According to recent industry studies, SMBs are adopting cloud services at a faster pace than large enterprises. For example, a 2010 MarketBridge study shows that of the 1,000 SMBs surveyed, 44 percent are already using at least one cloud-based application and more than 70 percent plan to move at least one new application within 12 months.[1]

The reasons for this shift are clear: SMBs typically have fewer complex IT requirements and less legacy applications that must be supported. And cloud computing provides a pay-as-you-go pricing model that doesn’t take a big upfront bite out of your IT budget.

Defining the cloud

Before embarking on a cloud strategy, it’s important to first understand what “the cloud” means as well as its pros and cons.  Cloud computing is defined as a collection of computing resources, including virtual servers, computing capacity, storage capacity, network capacity or software, that is delivered over the Internet as a service.

There are three key service delivery models that support cloud computing:

  • Software-as-a-Service (SaaS) is web-based software that is purchased from a service provider and is available as-needed. SaaS includes everything from email to web-based inventory control, CRM, marketing automation, banking services, project management tools, retail point of sale and WebEx meeting software.
  • Infrastructure-as-a-Service (IaaS) is web-based hardware that is purchased as an on-demand service. IaaS includes servers, memory, CPUs, disk space and network equipment. Most IaaS providers offer a highly available design model that delivers extremely secure uptime.
  • Platform-as-a-Service (PaaS) enables software developers to create new applications or enhance existing applications without the cost of purchasing and managing the underlying infrastructure. IT departments who prefer to customize their own solutions favor PaaS.

Taking advantage of the cloud

Cloud computing can enable SMBs to compete against larger enterprises in a cost-effective way.  It provides you with essentially the same applications and IT services. It is accessible via desktops, laptops and mobile devices. And you can purchase as much or as little capacity as you need at any given time to meet changing business needs.

The key advantages of cloud computing include:

  • Reduced costs – Since you pay for what you use when you use it, you can lower your operational costs and nearly eliminate capital expenditures; there are no IT Infrastructure related costs for cloud-based solutions.
  • Improved flexibility – You can react quickly to changing market conditions or seasonal fluctuations because you scale the services you need up or down based upon business requirements.
  • Automated updates – The cloud service provider is in charge of all infrastructure, software and services. That means you don’t have to worry about keeping up with the latest hardware offerings or software versions.
  • Higher performance and reliability – The cloud service provider is responsible for delivering high-availability, business continuity, disaster recovery and data backup services; so you benefit from enterprise class performance and reliability that is affordable. 
  • Increased speed – Dealing with physical computing resources often requires months of time devoted to specifications, ordering, installation, configuration and integration. With cloud computing, resources can be running in minutes and an entire solution can be configured in hours.

However the cloud is not a panacea. Certain downsides must be considered before you move to this business model.  For example, your service provider is in charge of all the services and data stored on the cloud, which means security and data integrity may be a concern, especially if you are in a highly regulated industry.  The physical location of their hardware and software is typically unknown, making site inspections and audits difficult.

Since your personnel will access the cloud via the Internet, any loss of that network connection may affect your workflow.  And application performance could suffer if there are network latency issues.  

Software customization can be challenging since your service provider actually owns the applications that your business uses. And cloud-based tools may not be as powerful as software applications. For example Google Docs lacks some of the features found in Microsoft Office.

Moving to the cloud

Choosing to migrate to a cloud computing model is a major business decision.  It requires careful analysis of your business goals, IT requirements and short- and long-term priorities. It also means determining the kinds of service level agreements your business needs, your regulatory compliance requirements and your security needs.

For those SMBs who conclude that you should move to the cloud, you’ll next have to determine the what, when and how to make that move. Do not under-invest when it comes to evaluating the options available and the service providers most suited to your needs. 

To learn more about cloud computing, read this OSF white paper, Demystifying Clouds for SMBs [PDF file]. For advice and guidance on your cloud decisions and implementation strategies, please contact us directly.

[1] Cloud Adoption Triggering Fundamental Changes in Mid-Market and SMB