Time to Ditch Hardware And Tap into the Clouds (Steve Hankins Commentary)

We live in interesting times. Huge technology change is going on all around us. From a consumer viewpoint it is easy to see. Unfortunately, from a business standpoint it is easy to overlook.

Not that long ago business technology was something that had to be acquired. A business would buy a phone system. Computers and storage would be purchased to hold data and run applications, also purchased, like general ledger, sales orders and inventory. Even e-mail was an application that most businesses purchased.

Once owned, technology required especially skilled people to implement and manage it. There were operating system patches and upgrades needed, application software upgrades, data backups to do on a regular basis and server room temperature to worry about.

If a business had problems with their technology, the answer was typically to hire another person or buy something else.

Most businesses don’t bother to add up all the technology-related spending every year. It’s just assumed to be necessary, so why bother?

The reality is that today most business owners and managers still live in the mindset of acquired technology. They happily use their smart phones to access e-mail and content via cloud computing but can be extremely resistant to applying the same notion of computing to their business.

While small- and mid-sized companies are in the best position to realize benefits by taking advantage of cloud computing, the existing model of ownership computing seems to have a strong pull.

What are the benefits of cloud computing over technology ownership?

The first reason to implement cloud computing is cost savings. The business does not have to invest in server hardware and software, make application purchases, pay staff for systems management or allocate space and utilities to technology. Cloud computing software and services are purchased on a “pay by the byte” basis, offering a significant cash flow advantage.

At first glance cloud computing services can seem more expensive. It is only when a business carefully identifies their real cost of technology ownership and weighs it against the cloud-based cost that the advantage appears.

The second reason to implement cloud computing is that the technology is available basically immediately. No time is lost in ordering, installing, provisioning or buying additional licenses for hardware and software.

The third reason is usability. Cloud technology is available anywhere you have an Internet connection. Most people are very familiar with using web browsers and using Internet applications. Smart phones today make extensive use of cloud computing technology. The cloud offers a familiar, “work from anywhere” environment.

The fourth reason is that cloud computing offers a secure, stable environment with full disaster recovery protection. Most small- and mid-sized business struggle with security and almost completely ignore disaster recovery. Cloud computing vendors have made major investments in infrastructure and provide a robust, secure environment that many businesses cannot afford to build for themselves. By using the cloud for data storage, the risk of company data being lost or stolen from company desktops or laptops is much less.

The fifth reason is management. Cloud-based applications require little technology management. There are no patches to apply, upgrades to perform or data backups to be managed. In-house IT staff can focus on the business use of the applications, not on the behind-the-scenes technical work.

The sixth reason is scalability. Cloud computing allows the IT services to shrink or grow based on the needs of the company. The ownership model requires purchases to be made in advance of the needs of a growing business. With the cloud computing model you only pay for the amount of technology needed at any given time.

While the City of Los Angeles and several Fortune 500 companies are placing their trust in Google Premiere services for e-mail and office applications, most small- and mid-sized business owners I talk to are reluctant to consider cloud computing services. The pull of the ownership model is indeed strong. 

(Steve Hankins is CEO and co-founder of Accio.US, a technology company providing advisory and management services for small- to medium-sized businesses. He may be reached at [email protected].)