As is often the case in technology development, the advantages cloud computing provides to larger organizations are beginning to trickle down to smaller ones, creating a world of new opportunities for small and medium-sized businesses. Cloud-computing solutions offer an inexpensive alternative for SMBs looking to save money (potentially, a very sizable amount) on their IT costs, and the new technology can help them level the playing field with larger competitors.
“IT begins and ends with increased efficiency and cost savings,” says Jim Darragh, CEO of Abiquo, a provider of advanced enterprise cloud software solutions. IT departments are working to find solutions to answer user demand, and that is especially true of SMBs, which typically have smaller budgets and must respond appropriately to both employee and market demand in order to survive. “So if SMBs can adapt to the cloud successfully, they are removing manual processes and installing automated, or at least very-easy-to-use processes, and that’s a recipe for increased productivity and cost savings,” he says.
The cloud can also provide ancillary savings, notes Alan Grayson, an instructor at PB Tech Training and Class Trainers, LLC, providers of IT and managerial training. “The cost of renting computing is cheaper than buying. Cloud providers pay on average one-fifth to one-seventh what a medium-sized datacenter would pay for electricity, cooling, Internet bandwidth, and staff per virtual server,” he says. Software licenses don’t have to be purchased, staff doesn’t have to be trained, and successful pilot projects can be rapidly expanded into production, he adds.
The cost savings inherent in most cloud solutions leads to other benefits, such as increased agility, as well scalability, as applications can expand as your business does, without the need to purchase additional software, hardware or licenses. Cloud-computing services are now available on shorter notice and enable faster decision making. “If companies find they’ve made the wrong decision about what service to use or how best to use it, it’s a lot easier than it used to be to stop a service and revise the strategy,” explains Jason Stowe, CEO of Cycle Computing, a provider of software solutions for on-boarding applications to a cloud environment. “This ability may not be the reason companies choose the cloud, but it’s a great benefit they get once they start working in the cloud.”
In addition to limiting or eliminating capital investment requirements and thus freeing up money for other business purposes, cloud solutions can provide higher levels of fault tolerance and disaster recovery through geographically distributed facilities, says Jerry Irvine, CIO of Prescient Solutions, an IT outsourcer. However, not all cloud solutions provide such redundancy, and SMBs must perform due diligence and obtain contractual requirements and SLAs (service level agreements) to make sure they get the level of protection they need.
Accessibility to information or services from virtually anywhere and less-expensive alternatives for customer and prospect communication are other significant advantages of cloud computing, says Bryan Goode, CEO of Infratel, which provides small businesses with access to the kinds of communication tools formerly available only to large enterprises. “Cloud solutions are very accessible to small businesses, especially when purchased through channel partners or resellers,” he says, citing an AMI Partners study (2012 U.S. Hosters’ SMB Cloud Opportunity Playbook) that projects $34 billion in spending by SMBs on cloud solutions in 2012, with 46 percent of that spending being funneled through service providers.
Jonathan Crane, chief commercial officer at IPsoft, a provider of automation solutions for IT, agrees the cloud’s accessibility is a big issue for SMBs, one enabled by its underlying utility business model, in which businesses only pay for what they need, when they need it. “Rather than sign a three-year agreement for thousands of dollars a month, SMBs can pay as they go and still extract the same benefits from the cloud that a larger organization would see,” he says.
Aggregation helps boost SMB accessibility to the cloud, and Crane sees that as one of the most important emerging trends in cloud computing. “Cloud service aggregation is ideal for SMBs because it brings together every aspect of the cloud into one consolidated platform or service, sold essentially as a utility,” he says. “This is growing steadily among SMBs that are moving into the cloud. It typically involves a single provider selling a combination of preset services to customers.”
Cloud-based infrastructure, development platforms, and applications can be a game changer for many organizations. “Because of the simplicity of cloud computing, it appears that SMBs will be doing more in the cloud, similar to the way large enterprises have turned to it over the past several years,” says Bill McLeod, director of marketing at savvisdirect, a cloud services provider. “Over time, it will make sense for more and more firms to move away from owned and operated assets to a flexible, intuitive service that responds to their needs automatically.”