Curt Finch

Cloud computing is the buzzword of the day, but what does it really mean to you and your business? For many companies, it means lower investment costs, greater ROI and increased efficiency. Here are some of the ways that businesses today are maximizing the benefits of cloud computing as well as tips on how you can do the same.

What is the Future of Cloud Computing?

Cloud computing, which is defined by Wikipedia as “Internet-based computing whereby shared resources, software and information are provided to computers and other devices on-demand,” is definitely here to stay. In fact, Gartner has predicted that by 2012, one-fifth of all businesses will own no IT assets at all. The ongoing development of cloud computing will take many forms and smart businesses will learn how to leverage it in order to succeed.

The term 'cloud computing' often includes a number of services under its umbrella, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and managed service providers. The staying power of cloud computing is due to a number of factors:

•       Low cost of entry – Instead of paying a lot of money to roll out a complex solution across the entire company, customers can just roll out one test department of 20 people. This means that managers can make sure that the solution works effectively without spending a lot of time and money to test it across the entire company. Any potential issues can also be tracked and addressed quickly, facilitating the rollout process later on.

•       Onus is on the vendor – If the vendor's service is broken, they won't be getting money from any customer for long. The vendor is therefore motivated to fix the problem ASAP. In this way, cloud computing allows you to influence product and service quality with the vendor directly through an ongoing relationship.

•       The vendor works for the buyer – Customers don't have to rely on their IT department to install anything. Everything is running securely at the vendor's location. This keeps IT professionals happy and lowers their stress, not to mention the fact that it lowers IT costs considerably. It also allows you to predict your ongoing expenses more accurately as your IT budget is tightened and scrutinized.

•       Less risky investment – The cloud provides significant cost savings by reducing IT requirements and allowing organizations to only pay for what they need. Instead of spending $60,000 all at once, for example, customers pay for the services monthly. The risk is lower and much safer than paying for hundreds of licenses for a service or solution that might not work out in the end. It also gives you the flexibility to change usage commitments as business circumstances change.

According to Gartner, cloud computing revenue in 2009 is believed to total $56.3 billion, representing a 21.3% increase from the previous year with no signs of slowing. Forrester has corroborated these value propositions, reporting that Software-as-a-Service in particular has proven to have a lower total cost of ownership (TCO) than expected. The firm also reports other benefits:

“Organizations that implement SaaS benefit from the ability to deploy applications rapidly — from initial deployment to adding new users and new modules. Firms also frequently report better user adoption and an elimination of the “shelfware” that is common with on-premise deployments, as well as a reduced burden on IT and admin for user support.”

Can You Really Trust the Cloud?

Many businesses today fear the cloud because they don't want to trust their sensitive data to a vendor. Such fears, while understandable, are generally misguided. Cloud computing vendors must provide a safe data environment or they're out of business, so security and backups are their top priority. Think about all of the companies you already trust with your data – banks, phone companies, etc. Cloud computing vendors have much more of an incentive to keep your data safe.

Let's face it: Your IT department is most likely being pulled in many different directions and can't be as focused on just one solution. With cloud computing, you can rest assured that your data security is better off, not worse.

That being said, it is important to perform due diligence when choosing a solution. Here are some questions that you can ask vendors to make sure you're working with a reputable company:

1.       Where is the computer that will be used to serve my application?

2.       Is the data center where that computer is located staffed 24 hours a day, seven days a week? What staff is on-site?

3.       What physical security measures are in the data center?

4.       Is there redundant power, such as batteries and generators?

5.       What cooling and fire suppression systems are available?

6.       How many Internet service providers (ISPs) do you buy connectivity from?

7.       Do you have a disaster recovery plan if your data center becomes unavailable?

8.       Are servers dedicated to each customer, or do multiple customers share a single server?

9.        What do you back up and how often? How long do you keep backups? Do you store backups off-site?

In addition to asking these questions, evaluate how well the vendor has integrated its service operations into its core business. Some vendors are only experimenting with the cloud computing model due to its immense popularity. For many, it is an operational change that is inconsistent with their culture. If this is the case, they will not be able to make customers successful if the processes are not well developed, mature or universally accepted.

Where possible, get a clear understanding from your vendor of its internal operational commitments to a cloud computing model. The value proposition that touts the advantages of having the same company build and manage the solution will be of no value if that sentiment is not accepted and demonstrated across its operations.

Doing this kind of research will go a long way toward easing your mind and ensuring success. Compare the answers to those you get from your own IT staff. You might be surprised which solution is better.

How Cloud Computing Can Save You Cash

Helping your IT department to lighten its load is one obvious way you can save money by using the cloud, yet that is only one of the cost benefits it provides. Automated systems for business functions such as time tracking or project management not only save time, but also minimize errors that people are prone to make when they manage data manually. You can imagine how much money your business will save when minimizing billing errors, for example.

Cloud computing solutions can also save businesses money because they are so flexible. Let's say a staffing firm needs an invoicing system for its employees to use, but its staff size fluctuates throughout the year. If this firm chooses a traditional software product, they could wind up paying for 500 licenses but only using 300 most months of the year. With Software-as-a-Service, they only need to pay for what they use each month.

Moving Forward

Cloud computing can save your business money, improve efficiency and keep data more secure than you could yourself. Choosing the right solutions and providers is essential, but by following the right processes you can ensure a profitable ROI. As we continue to move into the future of technology, it is likely that cloud computing will grow in popularity and capability. Starting now will prevent your business from being left in the dust as the business world evolves.