Leveraging Cloud Computing

If your eyes glaze over when hearing technical jargon, you’re not alone. The term cloud computing, which has never been sharply defined in the first place, is all the more difficult to understand because it is intangible: unlike a physical onsite server, you can’t see or touch ‘the cloud.’ But the cloud is where technology is taking us, and small to medium sized businesses should be aware of its many advantages and a few limitations.

A Bit of Background

In the last decade, the cloud has thrived, developed, and proven valuable for both businesses and individuals in equal measure. Users seeking space, speed, and safety have increasingly turned to the cloud.

Service providers have also proliferated, available from coast to coast to meet the needs of personal and professional users. Some are now universally known, like Dropbox, to store files in the cloud and access them from computers, notebooks, or a myriad of electronic devices.

Of course, today’s cloud—like the actual vaporous shapes in the sky—continues to change and evolve in real time. In five years, what we consider the norm may be completely different.

Benefits & Advantages

There are many benefits to cloud services, but one of the better selling points for moving from an in-house server to the cloud is customization.

“Cloud computing provides users with the ability to utilize computing resources that are flexible and easily configurable, without owning or managing the hardware platform directly,” explains Jeff Schaefer, general systems development manager for Produce Pro, Inc., located near Chicago, IL. “Instead,” he continues, “a third party purchases and builds the computing resources the user subscribes to, and the user only uses the resources needed.”

In simple terms, Schaefer reiterates that cloud-based services allow companies to spend more time on their operations and less time managing computer hardware and accessories. And for businesses in growth mode, the cloud gives management the ability to react more quickly to expansion needs for more services or storage capacity at a much faster rate.

While ridding crowded offices of bulky equipment is a major draw, the flexibility offered by cloud computing is the more powerful incentive. Not only can companies easily increase or decrease services and capacity, but such changes require little or no downtime.

Irvine, CA-based Zumasys, Inc. offers business, technology and cloud service solutions. President Paul Giobbi confirms that relocating data and applications from hardware to the cloud is much easier than it used to be. “Creating or bridging a customer’s network using a virtual private network (VPN),” he explains, is not a difficult undertaking. “You can do it today with zero downtime.”

Moving Forward and Up

Although there may be legitimate reasons for keeping a local server on your premises, moving to the cloud is still a compelling option—and it doesn’t have to be an all or nothing scenario.

Assessing current needs

But first things first: it is necessary to assess your current technology. To successfully move to the cloud, a certain amount of bandwidth is required for optimal performance, cautions Giobbi.

“The bandwidth required is a function of the number of enterprise resource planning (ERP) users and the design of the ERP itself,” explains Tim Smith, president of Spokane Software Systems, Inc. in Spokane, WA. “Even with a small organization, say three to five users, an internet connection with 25 megabits per second down and 3 megabits up would be the minimum we’d like to see.”

Another important consideration is legacy software applications that may not be conducive for a cloud-based hosted environment. These legacy applications often support special business functions like accounting or inventory management, but have not been upgraded in years. Various custom-built applications for unique business needs may not be optimized for cloud-based access either.

Step-by-step

This is when having the right partner is crucial and requires due diligence to find a service provider that not only understands your industry but the unique needs of your business.

Breaking the migration from onsite server to the cloud into well-planned steps or phases will help ensure the move is smooth and done properly. Each stage depends on the one before it, which is why it’s important to have a good implementation strategy.

Smith also suggests installing a firewall to provide antivirus, content filtering (limiting access to management-approved sites), and wireless service to the organization. Of course, part of the process is getting everyone up to speed on the new service and protocols. This includes reviewing and updating security procedures with all staff, from simple safety measures (like strong passwords) to scheduled backup or maintenance.

Figuring Costs

The actual cost for transitioning to the cloud differs, according to who you ask. Giobbi estimates the cost of using the cloud instead of onsite applications and a server at half—citing the approximate cost of upgrading a server every three years, training engineers, and physically backing up files—he believes this is double the cost of using the cloud for the same period of time.

“Eighty percent of spending on IT just keeps it running,” contends Giobbi. “When you migrate to the cloud, your IT people can focus on other things.”

According to Spokane Software’s Smith, cloud-based software generally has a lower entry price, as there’s no expensive server to purchase. Bringing a new client into the cloud requires less onsite time or possibly none at all, he says.

Not purchasing an expensive server lowers a company’s capital expenses, and potential total cash outlay. However, cloud-based software and data storage is typically accounted as an operating expense, so a shift from capital to operating expenses may need to be factored into the budgeting process.

To come up with an educated guess, list your direct costs such as fees related to physical servers, software licenses, maintenance contracts, warranties, necessary supplies, spare parts, etc. Then add up the cost of operations, including labor for maintaining servers, databases, and other technology, and even consider the physical space occupied by IT equipment—could this square footage be repurposed? And don’t forget the cost of IT consultants if used on a regular or annual basis.

It’s worth the time to explore the possibilities of the cloud. Compare costs, seek guidance, and find a service provider with solutions well suited to your business.