Cloud Computing for Small Businesses

Cloud computing, “What the heck is that?!?” I get this a lot from people. Yup. It’s the new favorite buzzword for technorati — and it’s has so many meanings. So how can this help the average small business?

The description of cloud computing I like most comes from a Wall Street Journal article I read a while ago:

” Cloud computing uses the Internet to access data and applications based in remote data centers.  A private cloud is a data center set up and run by a company for its own use.”

What this means is that instead of running applications on your local PC or Mac, or having a local server on which you run your application, you use a web browser to connect to a server located somewhere out there on the internet and run the application there. Google Apps and Yahoo!mail are two common examples.

There are several reason Cloud Computing is a great idea for small businesses but most of them relate to a single concept: Total Cost of Ownership (or TCO for short).

When you look at deploying an application, there are three basic costs that need to be taken into account

Capital Investment

  • Hardware costs: the cost of a computer on which to run the application
  • Software costs: the cost of the application software itself

Operating Costs

  • Administrative/maintenance cost: the cost of a person to maintain the hardware and software as well as the costs for electricity, cooling, system backup / recovery services, and spares

There are a soft costs that you need to add into the equations as well. Most people fail to consider the cost of downtime when you local system has crashed, needs to be repaired, and is unavailable. Depending on how critical the application is to your business, this could be a very significant cost.

If all of the above sound good, where’s the “gotcha!” or the unseen problem you ask? Simple. The fundamental requirement for using cloud-based applications for a small business is reliable internet connectivity. What this means is you need to have a backup connection from a different Internet Service Provider (ISP) than your primary provider. So, for example, if your ISP is Comcast, you should also have a backup ADSL connection from your local telephone company. It’s that simple.

So what does all of this mean? Cloud computing offers small business a great way of reducing their capital expenditures on systems and software, they can be be easy to install/deploy, and cut the overall costs for support and maintenance. The caveat, however, is that you will need reliable internet connectivity — typically with a backup.