By TIMOTHY REED
There is a lot of hype around cloud computing: It will save tons of money; it is easy to put in place; it gives you capabilities you would not otherwise afford. Given all the hype, it is important to define what cloud computing is and its potential for the small or midsized company.
Cloud computing means that another company provides the IT services you need to run your business. The cloud computing company runs your hardware and software, giving you additional bandwidth to focus on delivering value to customers. Cloud computing is like a utility that everyone uses without owning the physical assets. And, like a utility, with cloud, you pay only for what you use.
With cloud computing, everyone uses the equipment and software provided by the cloud computing vendor without the capital investment. You no longer need to buy that server or that piece of software and you don”™t need the staff to maintain it. You are able to leverage another company with extensive expertise in technology that manages all of this as a service. You benefit from the economies of scale, saving money and time.
Cloud computing is especially important to small businesses and startups, because it allows a company to avoid the initial capital investment in hardware and software, which was so often a barrier to entry. In addition, cloud computing offers the ability to quickly scale up or down, whether that need is driven from seasonal demands, the state of the economy or a successful growth strategy. It also gives companies the transparency and predictability around technology costs to plan more effectively, both in the short term and the long term.
The opportunities are significant. Imagine two companies that decide to merge to pursue a new product line. Imagine how easy it would be to complete that company merger and not have the headaches of extensive system integration, because the companies are using cloud services from the same “utility.”
Think about how you could spur innovation if you had the ability to prototype a new customer service for a specific target market in weeks, not months. Instead of engaging that service tech to install accounting software on your laptop, you just subscribe to a billing service or a check-writing service through a financial institution, based on your specific needs. You worry much less about technology and more about running your business.
Examples of strong cloud computing opportunities are everywhere. If you want your sales force to have automated sales functionality, sign up for SalesForce. If you want your HR department to be able to more effectively manage human capital resources, sign up for WorkDay. All of this automation is available through cloud computing. You can sign up, pay a monthly fee like a monthly magazine subscription and also cancel the subscription in the same way when the software or service is no longer needed.
Most companies we talk to today are trying to understand what is possible and what makes good business sense. We find some businesses are resisting cloud computing, while others are aggressively moving servers, storage, email, collaboration tools, applications and complete data centers to the cloud.
There are risks. What happens if the cloud provider”™s computing capabilities are not available? What happens to my ability to pay my staff or my suppliers or engage with my customers?
Not only are there trust issues, but you need guarantees around data protection, availability of computing resources and that your cloud provider has the capability to deliver, regardless of circumstance like geography, disasters or geo-political challenges. And in validating those cost-savings claims for the cloud, the total cost needs to be less than what you would have paid using traditional means.
Cloud computing has changed everyone”™s world. You watch TV program episodes via the cloud; you access Facebook; you engage with networks and communities that were inaccessible just a few years ago, all via the cloud.
Those who want to leverage the benefits of cloud computing for their businesses need to carefully select cloud providers. Your competitors and the next great startups are looking to the cloud to expand business, reduce costs and exploit the many positive opportunities afforded by the cloud.
Timothy E. Reed, CEO at ReedITC, has worked at Ernst & Young, General Motors and McGraw-Hill. He and his team deliver IT and operation transformation. ReedITC founded the Linkedin group “IT and Operations Transformation,” the largest global group focused on IT and ops transformation. It is a member of the Connecticut Technology Council; and is active in tech forums.
Comments 1