The Who, Why and How of Small Business Cloud Use

Wednesday Feb 27th 2013 by Pam Baker
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Does cloud computing make sense for your business? Looking at how your peers and competitors use the cloud might help you decide.

There's a lot of buzz these days about using the cloud, so it's natural to wonder if cloud services might make sense for your business. But that decision requires more then the marketing pitches vendors throw your way and articles that seem a little light on hard facts. A look at what other small businesses actually do in the cloud might be the best indicator of whether or not you should be there, too.

Achieving Cloud Awareness

As it turns out, measuring cloud use among small businesses can be a bit tricky because, while nearly all SMBs use the cloud in one form or another, some of them seem to be unaware of it.  

"At this point, most organizations have made some use of cloud-based services, even if they haven't been formally incorporated into standing business processes," explains Noah Weisberger, director of professional services at Coalfire, a leading independent IT auditing firm.

"This can be the small office that uses Gmail for email and collaboration, or DropBox for sharing files and data. Even traditional brick-and-mortar-only businesses can use an online CRM solution to help keep track of their regular customers and ensure that they achieve the highest levels of service," says Weisberger.

These common uses lead many small business  owners and managers to think of the cloud mostly in terms of software-as-a-service (SaaS) rather than its many other forms.

While some small businesses are blissfully unaware of their cloud use, or think of it only in terms of SaaS, others are so tech-savvy that everything they do in the way of IT is in the cloud. Such diversity makes it difficult to accurately rank the cloud's place in the small business universe.  But one thing is certain; the cloud does have a strong and central place in nearly every small business.

Cloud Scores and Small Business Attitudes

The wide fluctuation in how SMB owners and leaders define the cloud -- and in how they use it in day-to-day business -- makes the reports on cloud adoption numbers all the more interesting.

According to a study by CompTIA, a not-for-profit association for the technology industry, cloud computing awareness among SMBs is on the rise. "Seventy-eight percent of small firms said they were familiar or very familiar with cloud computing compared to 27 percent in the previous year. 20 percent of small firms and 8 percent of micro firms were current users of cloud computing solutions. Asked if they planned to use the cloud in the coming year, 50 percent of small firms and 21 percent of micro firms answered affirmatively."

Those findings are echoed on the ground in less formal settings.

"At the Shift Happens small business conference in Tacoma, WA the other day, an informal survey indicated that more than half of the small businesses were using cloud services," says Bob Bunge, associate professor in the College of Engineering and Information Sciences at DeVry University and a volunteer in a local small business incubator.

So, if awareness is on the upswing and attitudes favor cloud use, but only roughly half of small businesses (exact percentages vary depending on who you ask) currently using it, then it begs the questions: who uses the cloud and why, and who does not, and why not?

Which Type of Small Business Works in the Cloud

It turns out that it isn't the industry, the size, or the label on the pigeon hole that determines which small businesses jump right into cloud use and which hold back.

"There is wide use of cloud services across industries, sectors and company size," confirms Judith Hurwitz, industry analyst and CEO of Hurwitz & Associates, a market research and consulting firm.

"The exception would be companies that have highly private, restricted information that needs to be protected at all costs," says Hurwitz. "An example might be companies that execute government contracts where they are required to demonstrate the security of their data."

And there is the main roadblock in small business cloud adoption: security and compliance concerns.

"This misconception that the cloud is inherently insecure, unproven, comes at a higher cost, and is generally unreliable stems from lack of information about cloud in general and from press stories about cloud failures in particular," says Michael Keen, CTO of Appcore, a provider of local cloud infrastructure for enterprise private clouds and service provider public clouds.

The Secure Cloud/Rogue Cloud Conundrum

While some companies, like those that fit the example Hurwitz gave, are certainly correct in weighing security and compliance in every IT decision, many small businesses simply react to incorrect or incomplete information regarding security concerns in the cloud.

 "Despite its myriad benefits, many small businesses don't take full advantage of the capabilities of the cloud," says Tom Powledge, vice president of products and services for Symantec's cloud and small business group. "What's unusual about this trend is that it's more often due to a problem with users rather than the technology itself."

In short, small business owners who formally avoid the cloud for perceived security issues may find that their company data exists in the cloud anyway. And that creates the very security and compliance issues they hoped to avoid.

A 2013 Symantec survey titled "Avoiding the Hidden Costs of the Cloud" revealed a startling number of sneaky cloud deployments, i.e. cloud deployments without management's permission. "In fact, seven in 10 small businesses have experienced rogue cloud deployments within the last year, resulting in issues such as the exposure of sensitive information," says Powledge.

Further, SMBs often find their data in the cloud via key vendors and partners.

"We recognize that even if we didn't want to use the cloud, any vendor we partner with is likely already using it for their solutions or on the backend. Adopting these solutions and leveraging the cloud helps us stay in control," says Richard Reinders, an information security analyst at Lake Trust Credit Union.

"Security could be an inhibitor for cloud adoption for some people, but for us the cloud can increase security rather than reduce it," Reinders added. "Recently our antivirus software triggered on a piece of malware that came in through targeted email and was able to quarantine it through cloud-based analysis, not because of any signature already there. We use the cloud for our gain and for our purposes, including fraud detection, malware scanning and various day-to-day operations."

As small businesses come to view cloud services through a wider lens, they will likely make better security decisions. More of them are also likely to make the move to the cloud simply because they can often get more sophisticated services and security there than they can provide for themselves.  

"Additionally, we've recently begun to see the emergence of cloud-based services that are designed with high-security and regulatory compliance in mind," says Coalfire's Noah Weisberger.

"Got a small doctor's office that needs to send and receive faxes in a HIPAA-compliant fashion, or a law firm with the need to store encrypted files in a shared location with robust access control & reporting? No problem," says Weisberger. "A number of online cloud providers have either released, or are working to release, offerings that meet key needs around security and compliance."

What SMBs Use in the Cloud

According to CompTIA's Third in Annual Trends Cloud Computing study, the most popular cloud application services among small business included Web presence (50 percent), email (48 percent), virtual desktop (44 percent), business productivity (43 percent), collaboration (34 percent), and analytics (33 percent).

However, the adoption numbers and breadth of adoption may actually be higher than that.

"Many SMBs use the cloud and may not even realize it," says Raghu Bala, CTO/CIO of Source Interlink Media and board member/tech advisor to Fanggle, a cloud computing startup.

"For example, they may use low cost VOIP services, e.g. Vonage, that are cloud-based. They may be using payroll services such as ADP and Intuit that function over the cloud," Bala adds. "Many SMBs use online banking, which is cloud-based. And they may be using automation tools that are cloud-based, such as Salesforce.com. So in my opinion, many SMBs are heavily cloud-based and more will follow suit."

For most small businesses, cloud use tends to be heavy on the application end.

"The most common cloud services relate to social media, document creation and storage, online communication and collaboration, and specialized data services like CRM," says Professor Bob Bunge.

As to other cloud services, small businesses have yet to explore those in significant numbers.

"While a number of SMBs have already begun to incorporate cloud-based services into their technology portfolio, particularly around SaaS, many have been hesitant to take the plunge and incorporate full-blown PaaS (Platform-as-a-Services) or IaaS (Infrastructure-as-a-Service) capabilities," says Weisberger.

However, the cloud is still young and small businesses are just beginning to feel their way through its many advantages.

"Cloud computing has ushered in a new era of possibilities for small businesses," says Cindy Bates, vice president of U.S. SMB at Microsoft. "It used to be that only the largest companies had access to the technology capabilities that the cloud now makes accessible to businesses of all sizes --things like video conferencing, Instant Messaging and low-cost data storage. Cloud computing delivers all of this and more, in a low-cost and low-maintenance manner. It has made it easier than ever to get a business up and running."

Pam Baker has written for numerous leading publications including, Institutional Investor magazine, CIO.com, NetworkWorld, ComputerWorld, IT World, Linux World, Internet News, E-Commerce Times, LinuxInsider, CIO Today Magazine, NPTech News (nonprofits), MedTech Journal, I Six Sigma magazine, Computer Sweden, the NY Times, and Knight-Ridder/McClatchy newspapers.

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