Last week I offered Rodney Roger's perspective on the place of cloud computing in the enterprise. His premise, with which I completely agree, is that current "enterprise" cloud offerings lack the breadth and depth of on-premise systems. To paraphrase him, Salesforce and Workday are not ERP. He's absolutely right. He also points to emerging cloud solutions that do fit well in the enterprise (Box and ZOHO). By the way, if you enjoyed his article, here's another.
But what about the SMB market? SMB is a broad category, and the smaller end of it has needs that are much different than the larger end of it. Do cloud services make sense?
Well, let's define what "cloud" means. Most of us think in terms of "Software as a Service" (SaaS). Quickbooks Online, Google Apps and Salesforce come to mind. Programs that we used to install on our PCs and servers, but we now pay a subscription for and use on any device (PC, laptop, tablet, smartphone) anywhere that we have an Internet connection.
But "cloud" has an even broader definition. There's what is called "Platform as a Service" (PaaS), the delivery of services via the Internet, such as Amazon Web Services, Google Apps Engine and Microsoft Azure. Cloud applications are built on top of these services. Rather than running your own data center and application stacks, PaaS providers provide the platform on which to deliver your own cloud apps. Popular apps like Instagram (Amazon EC2) and Pulse (Google App Engine) are able to scale to hundreds of thousands of users quickly by leveraging the massive infrastructure of the PaaS providers. And then there's "Infrastructure as a Service" (IaaS), which can be as simple as your web-hosting provder or hosted phone system and as complex as hosted storage or hosted virtual machines. Amazon and Google enjoy great success by integrating their PaaS and IaaS services into complete top-to-bottom stacks that make deploying your cloud solution very easy.
All of this is very cool and very geeky. But what does it mean for the small business owner, with ten to twenty users answering the phones, sending emails, processing orders and paying suppliers? He has no IT staff; perhaps just a part-timer or a consultant on call. Well, think about this question: how costly is SMB downtime compared with enterprise downtime? Non-productive employees still need to be paid, orders need to be taken and shipped and the bills need to be paid. Cleaning the desks and straightening the file cabinets can only be done for so long before people need to be sent home. The small business owner can ill-afford the added costs and missed sales opportunities resulting from system downtime when cashflow is critical. As they say, you don't get to pick when a crisis will happen, downtime chooses you.
Traditionally we'd aim for a reasonable level of protection and redundancy. A good firewall, malware protection on the users' PCs, backup battery and power protection, mirrored drives in the server and maybe even a spare (sometimes older) server that can be pressed into service in a pinch. Good backups are important - a current image of your server that can be rapidly deployed to different hardware and daily backups of your files. These are the basic ingredients that are needed to get you back up and running in a day.
But what if your Quickbooks database gets corrupted, or your Exchange mailboxes disappear? What if your files are pillaged by persons unknown? What if your users' PCs are part of an Eastern European botnet used to harvest credit-card information from some massive online retailer? These are all problems I've encountered at one time or another. The bottom line is that most IT infrastructure is simple to set up, but requires skill and experience to protect and troubleshoot. A small business owner is not an IT admin, and probably doesn't want to be. As SMB systems become more capable, mobile and complex they require regular care and feeding and greater expertise to maintain.
So what does the cloud offer for SMBs? First, freedom from infrastructure downtime. The IT systems migrate to large datacenters with proper security, adequate power and cooling and exceptional redundancy. Second, freedom from software patches and updates, hardware administration and troubleshooting. Does that mean no admin? Not at all - there are still user accounts to be maintained, status to be monitored and backups to be performed (because you should always have a copy of your own data, right?). Third, mobility. The freedom to get to your applications and data from your smartphone or tablet, from your laptop at Starbucks, or from the PC at home. And finally, often better integration between different services - CRM integrated with accounting data integrated with electronic signatures integrated with project management.
What are the downsides? I mentioned a few last week. First and foremost is cost. Do your homework and compare the four-year cost of a cloud solution to the four-year cost of an on-premise solution (hardware & software acquisition, license and support subscription, system administration, power & cooling, etc). Do the numbers compare favorably, keeping in mind you're removing a huge chunk of downtime risk? Second, increased bandwidth costs. Depending upon the cloud solutions in use and the number of users at your site, you will probably want 2Mbps or better Internet service. That will cost you at least $150/mo for business cable or DSL, or about $250/mo for higher quality data service. Third, does the provider take security seriously? They should give you HTTPS (not merely HTTP) access, the ability to assign and revoke your users' passwords, isolation between their support staff and your data and the ability to control where and when your users can login. Finally, what level of mobility does the provider give you? Smartphone and tablet apps? An HTML5 website? 3G/4G access or just WiFi?
So, have you tried any cloud services lately? What does your solution look like?
UPDATE 2014-Mar-24: ZOHO has requested that I remove the links to their products. You can find them at zoho [dot] com.