Is The Cloud For Your SME?

Cloud SME

To call the ‘cloud’ a buzzword is an understatement. Rarely has a technology trend made such a big impact so quickly in the business world. Especially for smaller businesses, the promise of having some or all of your data and applications hosted remotely, saving time, cost and hassle, would seem to be a big boon.

The majority of owners and managers within SMEs will have wondered at some point whether the cloud is right for their particular business, its current and future needs.

Yet, surprisingly, the business owners and managers we regularly speak to tell us that it is hard for them to get a straight answer. They are frequently approached by vendors trying to flog their Cloud-wares but are finding that suppliers’ vested interests get in the way of a straightforward answer.

Moreover, the question is not easy to answer off-the-cuff. In reality, it is only by reviewing your company’s technology demands, and where you are in your journey as a business, that will tell you if the cloud is a valid option, or not.

The Cloud Defined

Before you begin to consider using ‘The Cloud’, it is important to understand what it is. That is easier said than done because as with many emerging technologies, the term still means different things to different people. One reason for this is that suppliers from diverse IT backgrounds are each approaching the cloud from their own particular directions.

It is, however, mostly accepted that the Cloud is about providing IT services via the public Internet instead of running them on hardware installed at your business premises. For instance, rather than having your email or CRM system running on servers inside your company, you could use services such as Microsoft Office365, Google Apps or Salesforce, which you access via the Internet.

As an idea, the Cloud has been around for a long time. But it has really become widespread as a result of three key developments. The first is the availability of virtualisation technology, which allows providers to combine a number of different hardware platforms into seamless ‘clouds’.

The second is, of course, access to ubiquitous, reliable, high-speed Internet connectivity that enables customers to access these clouds. Third, the standardisation of services such as CRM means that there is little to be gained from maintaining a bespoke or individually-tailored system on the company’s servers. A common, cloud-based platform will typically serve you just as well.

For SMEs, there are a number of very clear positives about the cloud. As you no longer have to buy and own servers and similar hardware, you can reduce your capital expenditure. Equally, running and maintenance costs may be reduced, as suppliers no longer have to factor in engineer visits to handle installations, upgrades or repairs.

Unlike applications on a company server, the packages and services offered via the cloud are designed for remote access. A cloud-based solution will therefore likely improve reliability and availability, especially for home workers or field-based users. Furthermore, they can be accessed via a standard Internet browser, so in theory these solutions will work regardless of whether you are using a PC, Mac or smartphone.

Control In The Cloud

However, opting for the cloud also involves a significant loss of control, and there are still concerns about where corporate data might be held, and who exactly has access to this data.

Understandably, many business owners and managers still feel their data is more secure when held on their own office premises. However, the opposite could be the case, as a sophisticated cloud service may well offer more stringent data security, back-up processes and access control than a typical SME may have in place at their own offices.

In the application space, the buzz around ‘The Cloud’ has led many software vendors to offer cloud-based versions of their software. In many cases, as a result of competitive pressure, they have embarked on this with very limited experience, trying to run before they could walk.

Often cloud versions of desktop software have been ‘knocked up’ all too hastily in a flawed effort to present existing packages over the Internet – when they were never designed to work in this way. So, what should be a step to reduce headaches for owners and managers of small businesses, having to deal with bug-ridden or compromised software may actually create new ones!

Not a problem if you can just pick up the phone and get the provider to sort it out, right? Not so! Low-priced cloud offerings in particular often have only limited support and non-negotiable terms and conditions. So if you’re looking for an account manager to deal with your grievances, chances are that there isn’t anyone to talk to.

Bye-Bye CAPEX?

While the conversion of capital expenditure (CAPEX) to operational expenditure (OPEX) is a strong selling point for Cloud solutions, there may well be cases where a capital project may have advantages over monthly costs.

For example, a small business may be able to secure a loan or investment funding for capital projects. There may also be tax benefits for making a capital investment of this kind, or a company might wish to present a low OPEX picture of your business to external parties.

Another consideration is that Cloud services may simply not be cheaper in the long term. You really need to do your maths, especially if you have already made investments in on-premises facilities such as a computer room, UPS and air conditioning, to name a few.

Rather than a CAPEX/OPEX replacement, your cost-benefit argument for using the cloud may be the ability to grow and shrink your costs in response to changes in your business. So perhaps the real value is in the flexibility of the Cloud, rather than in its financial model.

You also need to recognise that using the cloud means that services are now accessed down the company’s Internet pipe. For companies based in suburban or rural areas with slower connectivity, this can truly be a show-stopper.

And even if connectivity is generally sufficient for the business, it is worth remembering that the Internet does not come with a guarantee. Leased lines or point-to-point connections may be more reliable, but any connection can be down for several days if cables are damaged or exchanges get taken out by storms or floods, for example.

Telecoms providers will not offer meaningful Service Level Agreements or penalties to SMEs. The cost of an outage to your business will far outweigh the credits they will be willing to offer you as compensation.

If you are considering pushing a number of business applications into the cloud, then investment in a second data connection or a backup business broadband link should be a serious consideration. For this to be worthwhile, the backup link must be capable of supporting your business adequately.

So be careful of low-cost backups that may end up being of little use when you need to draw on them. Likewise, if you have a second data connection it should be provisioned differently to your primary link (for example, via a different exchange). In this way, you can minimise the chances of one incident wiping out both lines.

Buying Horses For Courses

Alternatively, if your office becomes unavailable – take the recent floodings, for example – or your business loses its communication link, you might ask staff to work from home. This can be a good, resilient business continuity plan, and cloud applications and data will be critical to making the changeover happen smoothly and without customers noticing. However, while this might be a solution for a business consultancy, it would be unfeasible for a manufacturer.

In summary, when exploring what the cloud could, would or might do for your business, don’t just jump on the bandwagon of the latest technology craze. Take the time to specify, research and choose what is right for your business needs, considering costs, risks, control and security issues, reliability and disaster management before deciding.

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Graeme Freeman

Graeme Freeman is co-founder and director of Freeman Clarke, a team of fractional (part-time) IT directors for small and medium-sized businesses. He founded Freeman Clarke having both run his own businesses and worked years for large corporates including Logica (now CGI) and BBC Worldwide.