The Cloud: What It Is And Why Businesses Should Care

Cloud computing has progressed to the point that it has evolved into a mainstream technology tool that businesses can use.

Earlier this year, the software company Parallels, which makes it possible for companies such as Spring and GoDaddy.com to provide cloud services to medium and small businesses, reported that last year the cloud services industry expanded to $45 billion worldwide.  One of the main forces fueling this growth came from 6 million small and medium businesses last year investing in their first cloud service.

This report also projected that this market’s expected annual growth is 28 percent through the year 2015 to become a $95 billion industry.

According to Stephen Braat, general manager and senior director of managed and cloud solutions for CDW, the cloud offers IT what businesses such as Federal Express and UPS was able to do for the shipping industry.

He added that in terms of getting product into the hands of customers, the technology allows them to do this at a lower cost and on a larger scale, with the cloud being the big technology equalizer.

Competitive advantage is largely driven by technology.  In the past, technology used by larger companies wasn’t available for smaller companies to use that have 50 or fewer employees.

According to Dan Levin, who is the chief operating officer at Box, the technology that Wal-Mart had been utilizing for its supply chain was something that smaller businesses were unable to keep up with.  He added that technology now is available for the first time that doesn’t require technical expertise or hardware that provides the same technology to small companies that large companies have.  This eliminates technology advantage, which is a very significant change.

cloudInstead of viewing the cloud – which is computing capability that is delivered across a network – as a kind of technology (since there are three dozen cloud computing categories at least), Braat recommends that it be viewed as a way to deliver consumer technology.

According to CEO Eric Diamond of Tribeca Cloud, which is a company that assists small businesses with understanding how cloud services should be implemented, typically many small business don’t have technical expertise or IT staff in-house.  This means that the people making decisions tend to not know which questions need to be asked about the tech infrastructure of their company.

He said one of the main things they see is that companies fail to define what the requirements are that will meet their business needs.  They need to ask themselves what they are attempting to get?  Do they want access to enterprise-level apps, be able to use new applications or save money?  Then research needs to be done.

Inside The Cloud

The cloud has four deployment models: community (shared among organizations), private (inside a corporate firewall), public (available over the Internet to the general public) and hybrid )combination of all three above).

According to Bratt, the cloud provides the following benefits: it is metered, which means a business only has to pay for what it actually consumes, is elastic, meaning very little needs to be used; is burstable, so a lot can also be used; and it is on demand.  Businesses using the cloud have enjoyed increases in employee productivity.  This in turn speeds up technology getting to the market and drives innovation.

According to Levin, for small business the public cloud is an absolute “game changer” since it provides them with access to applications on the enterprise level.  The private cloud is available for larger companies with data centers and IT staff in-house that are making large infrastructure investments, such as computers, so that the flexibility of their assets are increased.

Typically small businesses are not in possession of these things.  Therefore, it isn’t necessary for them to have access to all of this technology.

However, Levin says that for businesses who are attracted to the concept of a private cloud, there are some companies such as Microsoft, Amazon and Rackspace that host private clouds and furnish small businesses with dedicated equipment of their own on a dedicated network.  So it is private in a sense.  However, the company doesn’t need all of that to be kept in-house.  However, Levin cautions that it does require businesses to write their own applications and software.

CDW views its small business clients as utilizing the three service models of the cloud: platform-as-a-service, infrastructure-as-a-service and software-as-a-service.

Saas is used predominantly for office productivity like online file sharing, crunching numbers, word processing, email, as basic communication forms as well as security purposes (intrusion protection software, malware, spamware and downloading).  Braat said that Iaas functions like computing and storage.  It can be used for storing intellectual property such as proprietary code, applications, drawings and documents.

Braat says that technologists typically think of Iaas in terms of certain scenarios, like what can be used for backup in case there is a disaster.  Small businesses are at the point where they don’t store documents locally anymore due to anticipating unforeseen events.  So they will be able to get to their documents inexpensively and quickly through the disaster recovery process.

Meanwhile, platform-as-a-service, can be utilized for building applications and running a website within the cloud.

The Silver Lining For Small Businesses

According to market research from CDW, the barriers that small businesses cite the most are integration, performance and security.

Despite these issues, customers are showing a steep year-over-year increase of 27 to 39 percent in cloud technology implementation.

Parallels vice president John Zanni, says he sees massive growth and opportunity for small businesses that make use of cloud services.

According to Zanni, what technology is utilized is less relevant, but it is more relevant if well-known brands are being used by the services.  That way you can be sure that the latest technology is being used, the best brands, as well as the most secure and efficient software.  Business owners should be concerned with what the cloud does to allow them to focus their time and efforts on keeping their customers happy.

Taking A Step By Step Approach

Although there are numerous technologies making up the cloud, Zanni points out that owners don’t need to think that they either have to do everything offered by the cloud or nothing at all.

He says that companies should take in what the cloud can offer them over time.  Many services offer a try-it-before-you-buy-it model.  Small businesses can test the waters this way without having to take on a lot of risk.

Eric Diamond from Tribeca Cloud says that like any other kind of new service or product, due diligence needs to be done by small companies.  One pitfall is to rely on third-party services to inform business owners on what they need to use.  Another one is providers attempting to push long-term contracts on customers.

Some Sass providers attempt to get their proprietary software used by businesses, but on the basis of a long-term contract.  Diamond says it is important to look for a month-to-month service.  Let them prove first that they actually do what they say they do.

When it comes to the cloud, there are trade-offs that are perceived, including security and control, according to Box’s Levin,  But he says there aren’t any really, depending on the business.  For the past six years, levin has worked with the cloud and small businesses.

He says that those companies realistically will be getting much better performance, reliability and security with less hassle and lower costs.  He says he has seen many small businesses lose important data due to it not being backed up or residing on an old machine that is under a manager’s desk.

According to Levin, companies these days have the ability to trade all of this in and use the cloud.  This provides them with world-class infrastructure that some of the world’s best companies maintain.  All of this can be had for $50 per  month or less.

If companies do this correctly, cloud services makes it possible for them to receive information technology at the enterprise level at a cost suited to their business models, according to Zanni from Parallels.  Since cloud is based on a pay-as-you-go model, business owners will be paying from $5 to $10 per user rather than many thousands of dollars for services along with specialists to operate them.

Other benefits include having the ability to reach out to customers and employees, and being able to collaborate in new ways, like using online chatting functions and a web pages to expand the reach of a company.

Zanni adds that today we are living in a world that is deeply connected.  Whatever is taking place in the world of consumers should be occurring within the business world as well.

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