If the dotcom era’s start-ups were born in a garage, this time around they are being raised in the cloud. According to a YouGov survey for accounting software firm Intuit, over one-third of small businesses are using one or more internet-based application besides email. And according to both Intuit and a US-based poll by online talent marketplace Elance, cloud uptake is set to grow and fuel a boom in entrepreneurship.
In general entrepreneurs – or “netrepreneurs” are much more open to using cloud-based systems, says David Terrar of cloud consultancy and services provider D2C: “The tech savvy ones are often using a lot of the free or low-cost tools to get them off the ground, and the less tech savvy can see the obvious benefits once they are tipped off to what’s on offer.
“There’s more chance of innovation and start ups because the barriers to entry have steadily and dramatically reduced over the last decade. That, combined with the economic downturn, means more people are trying to do their own thing and start a business,” he adds.
He and fellow entrepreneurs identify the main benefits of moving into the cloud.
A major gain for lone entrepreneurs on the go – 70 percent of small business leaders cite accessibility as the main benefit of being in the cloud, according to Intuit. David Pippett, founder of DWP, a Bath-based PR firm, is among them: “I use Dropbox for file-sharing and backup, which automatically synchronises with your desktop. I can be on the train without an internet connection and still access it, then when I finish my journey, all of my files will have been automatically backed up online.”
Ease of setup
Speed to market is becoming increasingly important – entrepreneurs talk of product launch times in months, not years. So the cloud’s capacity to get you up and running fast is a big draw for startups, says Advanced 365’s Andrew Mellish. “You can just turn it on and go,” he says. “Gone are the days when companies like Friends Reunited have to store servers in their garage. You don’t have to have an IT team, yet you’re getting enterprise-class technology.”
Cloud’s capacity to encourage real-time information exchange is what’s transforming businesses, says the Cloud Industry Forum. It’s not just larger companies with dispersed workforces that benefit. “My business model is associate-based so I need to be able to share client files and collaborate on a project with other associates,” says DWP’s Pippett.
Likewise, D2C’s Terrar says it used a range of collaborative tools – Skype, Dropbox, GoToMeeting, Powwownow, Eventbrite, as well as blogs and wikis – that were crucial during its start-up phase.
The pay-as-you-go pricing structure is great for cash-strapped startups (and government departments) that cannot afford a major outlay on ICT – especially storage. “Instead of investing up-front in servers, IT personnel, software and time in negotiating a good price on each, entrepreneurs can use the cloud to get started quickly, paying month-by-month for what they use,” adds Salman Malik, CEO of Brightpearl.
New business JUSTPROUD, a community-based fashion business, reckons opting for a cloud-based platform at start up stage will have saved the business more than $440,000 over three years.
Social media tools have dramatically reduced marketing costs, too, while skills marketplaces give start-ups access to expertise they’d otherwise struggle to afford.
With all the start-up frenzy comes a caution: there’s a rash of new cloud-based providers, but just as in the dotcom boom, only some will survive. Quality control remains an issue, though cloud compliance is improving – the EU is pushing for more regulation and the CIF is working to promote industry standards.
Interoperability of services may become a problem as a business grows: it’s not always clear whether one service will ‘talk’ to another. “Say you start with email: the first choice you make could determine the rest,” says Mellish. He counsels entrepreneurs to do a bit of research online or even to spend an hour or two with a consultant.
Data sovereignty, too, is increasingly important: concerns have prompted bigger providers such as Microsoft to allow users to dictate where they want their data to sit.