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Cloud Computing Lets Small Businesses Focus on Their Business, Not IT

October 11, 2010

By Leslie T. O'Neill

The IT world is abuzz with talk about cloud computing and virtualization. Companies are turning to both technologies to help cut expenditures and extend their computing resources. Although some small businesses can benefit from virtualization, any small business can take advantage of cloud computing, accessing enterprise-grade software that would otherwise be too expensive and too complex for their IT departments. 

Cloud computing offers a simple way to deliver complex technology, including large-scale business applications. Customers access hosted applications and resources over the Internet with a Web browser. You purchase only what you need, paying for the amount of computing resources you consume or the number of employees using the hosted software every month. Applications and resources in the cloud are scalable, so you can easily increase capacity or add users (or vice versa) at any time.

"The cloud has enabled a lot of new technologies and capabilities that can be delivered to small businesses in a subscription payment model that makes sense for them. Applications in the cloud have been developed with the small business user in mind," says Susan Scheer Aoki, a vice president in Cisco's Small Business Technology group.

The cloud is everywhere

Cloud computing is divided into three general categories: Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS). Small businesses have embraced all three types of cloud services for their ease of use as well as the ability to access technology innovations that might have been out of reach due to the IT investment required.

In February, Cisco's Internet Business Solutions Group surveyed 510 small companies in the U.S. and found that 75 percent currently use a cloud service. Sixty-five percent expect to spend as much as 20 percent of their IT budget on cloud services in the next two years, and an additional 25 percent of these small businesses think they may devote almost half of their budget to the cloud by 2012.

Q28 and 32. What proportion of its total IT budget does/will your company spend on hosted or subscription technology services – now; in 2 years' time?

Q28 and 32. What proportion of its total IT budget does/will your company spend on hosted or subscription technology services – now; in 2 years' time?
Source:Cisco Internet Business Solutions Group, Sept. 2009

The number of small businesses using cloud computing may be even higher, believes Tim Harmon, an analyst at Forrester Research. He explains that smaller companies often access applications in the cloud without realizing it, noting that employees often use hosted email or a Web conferencing application such as Cisco WebEx.

Small businesses can operate almost entirely in the cloud, as long as they have a fast, reliable Internet connection. In addition to email and Web conferencing, small companies are subscribing to cloud services for security, storage and backup, on-demand computing, desktop productivity, business applications (for example, CRM and ERP) and sales and marketing tools.

How do you know which cloud services are a fit for your small business? Rick Moran, a vice president and Chief Marketing Officer in Cisco's Small Business Group, says it depends on what business your company is in. Technologies that are core to your business function, such as CAD in an architecture firm, should be deployed on site. Business software that isn't critical to what your company does is a good candidate to be accessed via the cloud.

He suggests that most small businesses are best served by a combination of cloud services and on-premise capabilities. "The cloud services will provide redundancy that is hard for small business to afford," says Moran.  

Big benefits for small companies

The benefits of cloud computing for small companies are especially obvious with SaaS. Applications in the cloud tend to be more robust than small business versions of comparable software, and SaaS providers upgrade them to the latest functionality more quickly than most small companies can. Cloud services can be more cost-effective for software that you use infrequently — paid for on a per-use basis — or that is too complex for a small business to deploy in house.

"The cloud has enabled a lot of new technologies and capabilities that can be delivered to small business at a price point that makes sense for them."

— Susan Scheer Aoki, vice president, Cisco Small Business Technology Group

Cisco's Scheer Aoki points out that cloud computing can give small business owners a competitive advantage by making their company's IT more flexible. 

"Cloud apps on the Internet are accessible wherever the employee is, so those apps can change and evolve and go with them on mobile devices and at home in a parallel office," says Scheer Aoki. The provider invests to ensure that the applications are delivered securely and reliably anytime and any place.  Further, she says applications delivered from the cloud like WebEx help smaller companies more easily collaborate with partners, vendors and contractors."

Marcus L. Wilson, president and CEO of intelligIS in Atlanta, thinks companies especially benefit from eliminating infrastructure costs with cloud computing. Using a hosted email service, for example, he says, "Mailboxes are $13 a month per user, instead of thousands of dollars for a server, licenses and system backups. That's a major cost reduction for a company."

The network is fundamental

Despite all that cloud computing has to offer small businesses, Moran is quick to point out the biggest sticking point: the network connection. Because all cloud services are accessed over the Internet, companies need superb network functionality.

"Small businesses never had to worry about network performance before with casual Internet use. But the network really matters in the cloud, so you need to plan the network interface and have strong security," explains Moran. "It can affect your employees if people can't access the apps in the cloud reliably and quickly."

Small businesses owners are very satisfied with cloud computing services, according to Cisco's SMB Cloud Watch survey, rating their average level of satisfaction as 7.8 out of 10. Of all the benefits cloud computing can provide small businesses, the most important is that it allows them to focus on their business instead of getting sidelined by IT.

Leslie T. O'Neill is a writer based in Pleasanton, CA.

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