Time-to-Adoption Horizon: One Year or Less
The rise of cloud computing represents a turning point in the way we view storage, processing, and applications. Previously, these services were tethered to a personal computer; without access to that particular computer, we had no access to our information and tools. With cloud computing, applications and files are stored elsewhere and are accessible from any computer on the Internet. Resources in the cloud are allocated as needed, scaling up or down according to demand. Content hosted on cloud systems can be accessed by multiple users, facilitating collaboration and document sharing. Storage and processing are available very cheaply in large quantities, and pricing for these services can be very flexible. Many commonly-used services run in the cloud today, enabling small businesses to rapidly deploy and scale their products without sinking capital into expensive hardware and its associated maintenance and support costs.
Systems of networked computers that dynamically allocate storage space, processing time, and application resources are known as clouds. Cloud computing is the practice of using such systems to develop or host software and store files. The cloud itself is invisible to the end user; it is simply the platform that supports everyday activities like email, photo storage and sharing, collaborative work, and specialized tasks like billing and accounting services or disaster-recovery backups. Cloud applications can often be accessed through a web browser, meaning that no additional software needs to be installed on the user’s personal computer. Additionally, some businesses develop and offer cloud-based services that other companies subscribe to.
Cloud systems are very stable because resources and applications are shared across multiple machines. If one goes down, another can pick up the load. Resources and storage space in the cloud are allocated as needed and scale in response to the level of demand at any given time. This elasticity of resources means that companies using the cloud to support complex computing demands, storage, and media streaming need not worry about over- or under-provisioning of resources, since the available resources contract and expand in real time in response to local demand. Cloud applications can keep both software and user files on these networked machines, meaning that any software updates are automatically applied; the user always sees the most recent version of the software, and never needs to download or install updates or patches.
Cloud applications are currently used for a variety of purposes, including social networking (think Twitter or Facebook), shared productivity software (like Google Apps or Microsoft Office Web), and administrative tasks like billing (Zuora is one example), payroll, accounting, and even on-demand shipping and inventory management. Because cloud applications can be accessed from anywhere and from a variety of devices — laptops, desktop computers, mobile devices — cloud applications open the door to working with talent that isn’t local. Even small companies can easily work with employees all over the globe.
Nonetheless, some businesses have been slow to adopt cloud computing, for a variety of reasons. Many companies, particularly larger ones, have already invested significant time and money in existing systems and are reluctant to change. As a solution for everyday business needs, cloud computing is still somewhat new, and some companies are unaware of the concept or unsure as to how cloud computing could be helpful to them. A survey of small and mid-sized businesses in the US and the UK sponsored by Rackspace Hosting and released in January 2009 indicated that small businesses are generally uninformed about cloud applications; compared to mid-sized businesses, small companies make very little use of cloud services (see http://www.rackspace.com/downloads/surveys/CloudAwarenessSurvey.pdf).
For other companies, cloud applications present risks that are difficult to overcome. The fact that data and files are stored in the cloud, as well as the software used to access them, raises questions about security and privacy of information — particularly sensitive information such as employee records, health-related or legal information, and other confidential data. Some companies are not comfortable giving up control of the physical machines on which such data is stored, even if the data is encrypted and the machines are securely protected.
Relevant Applications for Small to Medium Businesses
Cloud computing provides opportunities for rapid expansion, especially for small businesses, without the attendant costs of obtaining, installing, and maintaining hardware and software. Instead, cloud computing enables businesses to employ a pay-as-you-go model for services that have traditionally required substantial capital outlay.
Businesses can either use or offer cloud services (or both). Businesses that use cloud services find them helpful for a variety of activities from file storage, backup and archiving to outsourcing administrative and other tasks. Cloud-based data storage and delivery services allow small companies to look like big ones. Cloud resources can facilitate business planning and remote collaborative workgroups; offload cost-intensive information technology infrastructure, such as server space and customer communication databases; provide free or low-cost productivity software; and support a mobile workforce as well as mobile sales.
FreshBooks (http://www.freshbooks.com), for instance, helps companies keep track of clients, projects, and contractors, generating timesheets and invoices automatically. Invoices can be mailed to clients directly from FreshBooks via either email or postal mail, and contractors can use their own FreshBooks accounts to track and bill their hours for company work. Another service, Zuora (http://www.zuora.com), offers online services for subscription billing and recurring payments. LotusLive (https://www.lotuslive.com/) provides a suite of services, including email, social networking, collaborative workspaces, and online conferencing.
A growing trend is for businesses to regard customer relations as building a fan base of sorts. Many cloud-based applications facilitate this view and enable customers to market their favorite businesses through online word of mouth. Services like GetSatisfaction.com, iContact, Constant Contact, Facebook, and Twitter all give customers a place to ask questions, make suggestions, register complaints, or give praise — in a public and searchable forum. User communities offer support to novices (at no expense to the business!) and give advanced users a place to swap tips.
As these examples show, cloud computing is changing the dynamics of companies who use cloud services. Just as important, it is creating opportunities for new forms of business services to emerge. Companies that offer cloud computing services are growing rapidly. Following in the footsteps of giants like Amazon.com, other large companies are taking advantage of excess storage and computing power by renting it out with a usage-based fee structure. Smaller companies are able to offer scalable services for hundreds or thousands of clients using cloud-based applications to manage and deploy their products.
A sampling of applications of cloud computing across industries includes the following:
- Accounting. Services like Bill.com allow small and mid-sized business owners to automate billing and filing. Many companies, from doctors’ offices to convenience stores, are using this service to reduce accounting time substantially.
- Bioinformatics. Several California-based biotech research companies are looking toward cloud computing as a faster, more cost-effective way to examine genetic sequencing. In 2008, the cost of genome sequencing was $50,000. In 2009, it has dropped to $5,000, in large part because of the relatively inexpensive yet powerful computing capacity afforded by the cloud.
- Sales. Increasingly, companies are turning to cloud solutions like those offered by SalesForce.com for customer relationship management, customer service, and other tasks. Using cloud-based applications like these, companies can focus on sales and service and leave the maintenance and development of software systems to others.
Cloud Computing in Practice
The following links provide examples of cloud computing in business settings.
California Agency Embraces Mobility, Cloud Computing
(Charles Babcock, InformationWeek, 20 May 2009.) Cloud computing enables the remote workers of The California Public Utility Commission to stay connected, whether they are dispatched to the Sierra Nevada peaks, or California’s back-country desert.
This cloud computing company specializes in serving small and mid-sized businesses. Among the benefits they offer: the ability to direct a worldwide team remotely; manage email; provide instant access to files, including those too large to send via email; make available an online forum for editing large documents; and the capability to train employees using online sites.
Cloud Based Business Phone System By RingCentral
(Press Release, Small Business Trends, 20 July 2009.) A complete, cloud computing-based telephone system — the first of its kind — is now available to small businesses for a flat monthly fee. By using cloud computing, California’s RingCentral is able to provide services that would normally cost thousands to implement.
Real-Time Web Sites
Salesforce.com offers a cloud-based platform that hosts websites. Create a website quickly and easily, and rest assured that high traffic won’t be a problem (the Starbucks volunteer site received over one million hits in the first few days).
Technology: When the Forecast Calls for Cloud Computing
(Michael Fitzgerald, Inc., 1 January 2009.) This article offers several examples of California small businesses that are currently benefiting from cloud computing.
What Are the Advantages of Web-Based Software?
One cloud computing company, 37 Signals, provides clear, tech-free explanations about the benefits of cloud computing. 37 Signals offers a suite of services, allowing each client to match a product to his specific needs. This link will help determine if this technology might be right for your business.
For Further Reading
The following articles and resources are recommended for those who wish to learn more about cloud computing.
Cloud Computing Highlighted as an Emissions Reduction Strategy
(Greener Computing, 15 July 2009.) In addition to saving money on software, companies who outsource data storage via cloud computing save thousands of dollars in energy costs.
Cloud Computing: Hot Technology for 2009
(Neal Weinberg, Network World, 5 January 2009.) Several of the benefits of cloud computing to a small business include pay-as-you-go, or paying only for services you use, and eliminating the up-front fees of setting up a new tech system.
Do You Need Capacity Planning For Cloud Computing?
(David Collier-Brown, O’Reilly, 12 July 2009.) If your product-based company experiences extreme fluctuations in sales (around the holidays, for example, or when the 49ers win the Super Bowl), a cloud-based sales system may suit your needs.
Egnyte Survey Reveals Fear of Flying Among Small Business Owners Adopting Cloud Computing Solutions
(Enhanced Online News, 30 June 2009.) Egnyte, located in Mountain View, California, has developed a hybrid product to ease the concerns of small business owners regarding loss of Internet connection and cloud computing. The product, Egnyte Local Cloud, offers the benefits of both online and offline services.
Eli Lilly On What’s Next In Cloud Computing
(John Foley, InformationWeek, 14 January 2009.) Eli Lilly, currently using Amazon Web Services as its cloud, sees the need for an intermediary between the pharmaceutical company and several cloud-hosting sites. So far, one of the greatest benefits of cloud computing to Eli Lilly has been the speed of setting up new servers.
How to Explain Cloud Computing to Your CFO
(Bernard Golden, CIO.com, 5 November 2008.) This article explains the cost-benefits of using cloud computing. It also discusses why outsourcing some storage behooves a company’s IT staff.
Delicious: Cloud Computing
Follow this link to find additional resources tagged for this topic and this edition of the Horizon Report. To add to this list, simply tag resources with “hz09biz” and “cloudcomputing” when you save them to Delicious.
Posted by NMC on September 29, 2009