When it comes to competing with larger, enterprise-level organizations, small and mid-sized businesses (SMBs) often find themselves at a disadvantage. Traditionally, the bigger the business, the bigger the budgets for key procedural components like advertising, product development, distribution, and information technology (IT).
But when it comes to IT for the SMB, cloud technology is leveling the playing field. Cloud computing—that is, outsourcing data center hardware and operations, software applications, and data storage to a managed services provider—benefits SMBs in several different ways, all of which enable them to control costs, scale quickly, reduce risk and compete more efficiently.
As such it’s no wonder spending on cloud computing services by U.S. SMBs has risen rapidly over the past five years. Today some 37 percent of small businesses have adopted cloud computing, with that number predicted to be at 80 percent by 2020. Private cloud is playing a big role here, especially for businesses operating in the healthcare or financial industries space who must meet certain compliance standards. Let’s take a deeper look at why embracing cloud is a smart move for the small to mid-size business.
Moving data and applications to the cloud can reduce both capital expenses and operating costs for SMBs. According to a recent Forbes article, 82 percent of companies who have adopted cloud technology in their business have seen cost reductions. Most of those cost reductions occur because cloud usage allows them to spend less on data center space, power, cooling, bandwidth, and hardware, reduces costs related to software maintenance and helps mitigate the problem of scarce IT talent.
The magnitude of cost savings will vary based on a number of factors, including what workloads and applications are moved to the cloud, and how fees scale with usage. In addition, shifting expenses from capital outlays to ongoing operating costs can provide cash flow and tax benefits.
Cloud computing typically provides a reasonably priced point of entry, with the ability to scale services and computing resources up or down, as quickly as needed. Not only can computing capability and capacity be added at lower cost than with an internally operated data center, but added costs are incremental rather than stair-stepped due to periodically installing new servers.
Support for Mobility
Putting data and applications in the cloud makes it easier to support employees who are mobile, traveling, or working remotely. This not only improves productivity but can help with your corporate culture overall, as well as with your recruiting efforts. The anytime/anywhere data and application access provided by the cloud enables small businesses to hire virtual team members in situations where specialized talent may be scarce in their area. In addition, it makes it easier for SMBs to offer perks like flex time and the ability to work from home. These offerings can improve productivity, collaboration, and employee satisfaction: One recent study by Salesforce found that 42% of employees would exchange a portion of their pay for the ability to telecommute. On average they’d be willing to take a 6% pay cut.
Also relating to mobility and culture, cloud technology makes it more feasible to implement bring-your-own-device (BYOD) programs for employees. BYOD can save companies money in terms of hardware, support, and telecom costs (as much as $734 per employee each year). What’s more, BYOD frequently increases productivity and employee satisfaction, as people can use devices that are familiar to them.
One area where smaller firms—with their flatter management structures and simpler processes—typically have an advantage over big business is in the speed with which they can make changes and adapt to market conditions.
Cloud computing supports and extends this by enabling SMBs to deploy new applications and add services very quickly; there’s no delay due to buying new hardware and installing software. Some expert predictions specific to SaaS include:
- Centaur Partners’ SaaS Market Overview, which took a deep look at M&A activity in the tech space and analyzed growth in the market for SaaS and cloud-based business application services, where we’ve seen growth from $13.5 billion in 2011 to some $32.8 billion in 2016.
- Cisco’s Global Cloud Index: Forecast and Methodology: 2014-2019, predicts that by 2018 some 59 percent of cloud workloads will be SaaS workloads, up from 41percent in 2013
- Gartner reports that IT leaders are focused on “operational agility,” which is sure to result in increased SaaS revenues, and it is probable we’ll also see SaaS being the top driver in cloud adoption.
In the movies, brilliant but devious hackers launch sophisticated attacks against hardened targets. In the real world, hackers seek out soft targets; they probe large numbers of servers across the Internet, looking for vulnerable systems. In the news of late is the IoT and how toys connected to the Internet can lead to serious security and safety issues. In fact, in a recent article on that very topic, MasterCard’s CEO Ajaypal Banga, mentioned they thwart some 15,000 cyber attacks daily. While your company might not warrant quite that many attacks daily, if there are any vulnerabilities, your business could potentially be at significant risk.
Data breaches are costly in terms of the cost to consumers, as well as both direct financial loss and damaged reputation for businesses of any size. According to a study commissioned by Microsoft, 94 percent of SMBs say cloud infrastructure improves data security, and 96 percent agree it reduces worry about system outages. But SMBs often lack the resources to invest in the comprehensive technology, talent, and processes that larger firms can deploy. That makes it essential to work with a hosting provider that has deep security expertise.
For most companies, IT system downtime means business downtime—and downtime is expensive. Even planned downtime due to hardware and software upgrades often involves not-insignificant costs.
Extended downtime due to a natural disaster, and/or the loss of critical business data, can be devastating. Fortunately, cloud computing can make business continuity and disaster recovery planning easier by storing data in more than one location, and enabling businesses to get vital systems up and running quickly after an interruption in operations.
The good news on this front is that SMBs seem to be especially “on top” of disaster recovery preparedness, and are more than twice likely as larger enterprises to have implemented cloud-based backup and recovery solutions, both to reduce capital expenditures and take advantage of the specialized expertise that managed hosting providers can offer.
In sum, cloud changes everything. Whether it’s lowering costs, making mobility a priority for the business, offering scalability and increased agility, or putting protections in place that reduce risk overall—or all of these things–cloud is a game-changer. SMBs will always face some disadvantages when competing against larger industry players. But with a smart, secure approach to cloud computing, IT no longer has to be one of those factors.
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