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As the economy commences to regrow and stabilize, companies are looking to rebuild. When posed with the prospects of either growing or being left behind, the choice must be new growth, and growing in any 21st century business means updating your IT and processes.
Cloud computing has revolutionized small businesses for many reasons. Primarily, cloud comput-ing dramatically reduces both productivity and upgrade investment by reducing or eliminating the need for hardware, servers, software for your PCs and workstations.
You use the applications needed without having to utilize internal resources and tech, thereby greatly reducing power usage and cutting costs.
Late last year the Gartner technology research group pinpointed its top 10 trends for 2010. At the top of that list was “cloud computing.” Cloud computing is of increasingly importance interest to companies, even small business operators because, among other things, it can greatly improve efficiency and allow for growth without the usual major costs of ramping up the IT department.
You may hear many uses for that term, “cloud,” but cloud computing is basically any computing done via the Web using a Web browser. It usually includes shared servers that provide resources, software and data to computers and other devices on demand. If you are a small or medium size company owner or manager who is interested in cloud computing, here are several compelling reasons to consider it:
1) Lower cost. Initially, cloud computing requires less investment because you don’t have to buy large servers and software. In addition, the traditional implementation and programming costs are lower because most cloud systems are fully integrated. It all leads to less need for borrowing during times of tight credit. A study by Pepperdine University showed that while 79 percent of businesses surveyed predicted opportunity for growth, less than 5 percent of banks plan to loosen their lending standards during the next year.
Costs are also lower in terms of the ongoing total cost of ownership. Hurtwitz & Associates, in a study sponsored by cloud computing firm NetSuite, compared NetSuite’s technology to that of implementing Microsoft Dynamics GP/CRM computing over four years for three different levels of users in a company. Two smaller user groups cost about 50 percent less than the on-site system, and a 200-user scenario cost 35 percent less.
Here are some of the reasons for ongoing savings. In the cloud, system updates are regularly scheduled and requires less cost than an on-premise system. Cloud computing, because it doesn’t require large clean rooms, cooling systems and dedicated T-1 lines, is more energy efficient and saves on office space. You also don’t need the associated technical staff to keep your computers running. A Gartner study showed that 63 percent of the typical IT budget is consumed by administration and support. Operating costs of the cloud provider are lower because they can be spread across all customers and included in the monthly licensing fee. Finally, because cloud computing is licensed and represents a steady expenditure of a lesser amount of cash, the cost of capital is less without the costs associated with large capital loans.
The cost argument over the cloud versus on-premise computing rages on. I counsel clients that if you operate your on-premise system for a decade or so, the overall costs can be about the same. The problem is that most on-premise systems need to be upgraded every three or five years. So the cloud wins the cost battle on a practical level.
2) Scalability. Cloud computing is scalable. In other words, as your company grows, your computer systems can grow with you without massive reinvestment. Cloud software providers are continuously upgrading their products. As the number of users in your company grows, you will pay more in licensing fees, but you won’t be limited by the number of users. Because the cloud is available anywhere at any time, your company can also grow in different locations without having to create a new data center or on-premise server system. If your company goes global, cloud providers can make multi-currency and language systems available to you.