Operating in the Cloud: A Boon for Small Businesses

Published On March 4, 2013 | App & Software

Every small business begins with an idea and someone who’s willing to make it a reality. As the business grows, however, so do the expenses. Whether it’s labor, materials, advertising or legal fees, there’s an endless list of monetary responsibilities that have the potential to handicap the growth of any new business. It should thus come as no surprise that nearly half of all small businesses in America fail within their first five years.

The Cloud

In recent years, a new trend in technology has emerged, namely cloud computing. From the standpoint of the average consumer, the daily application of cloud resources is usually centered on remote data storage via third-party vendors such as Dropbox or SkyDrive.

For businesses, particularly small businesses with limited capital, the potential applications of cloud computing are far more comprehensive. As the industry of cloud computing grows, so do the services offered, and today small businesses can run their entire operation via the cloud, thereby greatly reducing overhead costs.

Small Business Applications

For most small businesses just starting off, the most beneficial cloud resource will be software applications. Known as software as a service, or SaaS, this form of cloud computing provides businesses with resources like email, data storage, document services, inventory management or payroll and HR services via subscription-based software.

The biggest benefit of a subscription-based model is the elimination of the cost of ownership. Additionally, when all of your operations are based in the cloud, there’s no need for a centralized location for employees. Cloud-based document services such as Google Docs, and now Office 365, allows multiple users to participate in live project collaborations. And with communication services like Skype offering video conferencing, there’s no longer a need for everyone to be in the same room.

Cloud computing isn’t just limited to software, though. Another popular cloud service is infrastructure as a service, or IaaS, where businesses rent servers, storage and network services. For a small business, IaaS eliminates the cost of purchasing and storing equipment as well as the personnel required for maintenance.

Risk of Operating in the Cloud

While the benefits of cloud computing are exponential, the service does not come without risks; more specifically, security risks.

In recent weeks, many large American corporations have reported security breaches, from Google to The New York Times. If a company that has the resources to dedicate an entire department to information and network security is vulnerable to data breaches, so is a small-level business that’s wholly dependent on the security system of a third-party vendor.

An additional risk of basing operations in the cloud is the potential for outages. If you’re a Netflix subscriber, you’ve probably experienced a service outage over the Christmas holiday last year. When Amazon’s Web Services went down, Netflix, which uses Amazon’s servers to host its operations, couldn’t do anything. While customers reacted negatively, Netflix had no choice but to wait for its cloud service provider to resolve the situation.

Both anecdotes serve as a lesson on the very real risks of operating in the cloud.

— By Editor

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