Small Business Technology: Cloud Computing on the Rise

Tuesday Jan 4th 2011 by Thor Olavsrud
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Experts say prospects are bright in 2011 as small business IT begins to embrace cloud computing. Benefits include enterprise-class technology at a fraction of the cost of on-premises solutions.

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Was 2010 the year small business IT took the cloud computing plunge? Yes and no.

A company called 7th Sense Research recently conducted a study on cloud computing in small business computing environments on behalf of Microsoft. According to the study, 29 percent of SMBs see the cloud as an opportunity for small business IT to be more strategic; 27 percent of SMBs have bought into cloud because it integrates with existing technology investments and 12 percent of SMBs have used cloud computing to start a new business.

But at the same time, small businesses overall are largely unfamiliar with cloud computing. "Roughly 20 percent of SMBs claim to know what cloud technology is," said Josh Waldo, director of SMB Marketing at Microsoft (NASDAQ:MSFT).

Those numbers don't seem to jibe, but Waldo noted that while people may not identify with the cloud computing term, that doesn't mean they aren't using the technology. For instance, many people use Gmail or Hotmail -- prime examples of the software as a service (SaaS) form of cloud computing -- without ever realizing they're tapping into the cloud.

"People might not understand what cloud is," he said. "But they are using it. They're using in their private life. In some cases they're using it in their work life. But they might not necessarily identify it with the term cloud."

Waldo believes small business's lack of familiarity concerning cloud computing is an opportunity for Microsoft and other providers of small business technology.

"For Microsoft, what that means is that this gives us a big opportunity to really educate SMBs about cloud technologies and how they can benefit their business," Waldo said. "Our goal is really going to be to help SMBs evolve how they think about technology."

The benefits for small businesses that embrace cloud computing are potentially enormous, according to Waldo.

"First, SMBs can get enterprise-class technology at a fraction of the price, where you're not purchasing on-premises technology that's going to cost you an enormous amount upfront," he said. "Second, it really allows companies, whether you're a development shop and you're building software, or you're an end customer -- like a financial or insurance firm -- to focus on your business rather than your IT requirements."

For instance, by outsourcing datacenter needs, small business IT no longer needs to build out capacity to handle potential spikes in data processing or transaction processing. Instead, they buy the processing power they need as they need it.

And that leads into another of the key benefits of cloud computing according to Waldo: elasticity and the expectation of mobility. Elasticity, he explained, is the capability to scale up or down rapidly based on your needs.

That includes adding processing power as needed, but it also means being able to easily add new users from a seasonal workforce without all the headaches of per-seat licensing that can come with traditional desktop software.

As for the expectation of mobility, Waldo noted that today's employees -- armed with notebooks, smartphones and tablets -- have the desire to make their work more flexible by making it mobile. By exposing core applications as SaaS via the cloud, SMBs can let employees access the information and applications they need while on the go.

Small Business Technology: Embracing Cloud Computing

For SMBs that have decided to take the plunge and add cloud computing to their small business technology portfolio, where's the best place to start? Waldo recommends getting expert advice.

"We really think it's important that SMBs choose carefully," Waldo said. "If they're uncertain, they should work with a third party or a consultant or a value added reseller or some type of agent who understands the various elements of cloud technology and [who] can advise clients."

Nate Odell, director of marketing at Skytap, a provider of cloud automation solutions, said the first thing a small business should consider is the problem it is trying to solve.

"The most important thing from Skytap's perspective is that the cloud really isn't just about infrastructure," Odell said. "It's about people solving problems. It should be about scalability, elasticity and economy."

He added, "What our small business customers are asking for is the ability to create virtual environments, run applications without code changes or rewrites and, most importantly, to be able to collaborate and share using a self-service Web interface."

Odell said anyone responsible for small business IT should ask a number of questions when considering a cloud services provider.

Most importantly, does the cloud provider allow you to run existing applications without any code rewrites or changes to code? This may be the most fundamental question of all. According to Microsoft's research, 27 percent of SMBs have already bought into cloud services because it integrates with existing technology. Another 36 percent of SMBs would be encouraged to buy into cloud services because it integrates with existing technology.

"Being able to migrate custom applications over to the cloud without rewrites is not only a huge cost saver but also a huge time saver for SMBs," Odell said.

Small business owners should also ask whether the cloud provider offer granular user access and user-based permissions based on roles. Can you measure value on a per user basis? Can you auto-suspend resources by setting parameters on usage to avoid overuse of the cloud?

The latter is especially important, he noted. While cloud services can lead to tremendous cost savings, their pay-as-you-go nature can lead to a massive bill if not used efficiently.

Odell also recommended paying special attention to the level of responsive support offered by a cloud provider.

"I think for SMBs it's really important," he said. "Having to log a Web form and then wait 24 to 48 hours for support can be really frustrating." Instead, he said, the provider should guarantee that a support team would respond within a few hours.

Waldo agreed, noting that a service-level agreement with a high-availability guarantee and 24-hour support is essential.

Thor Olavsrud is a contributor to SmallBusinessComputing.com and a former senior editor at InternetNews.com. He covers operating systems, standards and security, among other technologies.

Do you have a comment or question about this article or other small business topics in general? Speak out in the SmallBusinessComputing.com Forums. Join the discussion today!

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