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Cloud Computing and Small Businesses: Benefits and Issues

Updated on December 28, 2014

Computing in the Cloud

What is Cloud Computing

A cloud provider is a company that offers services as: 1) Infrastructure as a Service (IaaS), 2) Software as a Service (SaaS) or 3) Platform as a Service (PaaS) to businesses customers or individuals.

It is common knowledge that small businesses are constrained by financial limitations while at the same time they need to use modern technologies to compete in a fiercely competitive marketplace. It is in this context that cloud computing can provide small business owners with an opportunity to use one of most cost effective technology solutions available. In this article we discuss how small businesses can benefit from cloud computing. In addition, we also explore some challenges and risks small business owner should be aware of when seeking to integrate cloud computing solutions into their business.

Cloud computing has become a household name in the field of information technology such that everyone connected directly or indirectly with it has a different definition. For some it is an technological innovation and for others it is an enabling technology competing with traditional technology that offers economies of scale to reduce operating costs. In simple terms, cloud computing can be viewed as a large network of computers managed by large organizations to provide services (outsourced) to small business enterprises or individuals.

Workers Collaborate to Share Information
Workers Collaborate to Share Information | Source

Cloud Service Providers to Watch

  • CloudBees
  • Engine Yard
  • dotCloud
  • Profit Bricks
  • Heroku

Cloud computing offers benefits ...

Small business owners by opting for cloud computing platforms can realize the following benefits

  • There is no need for them to incur upfront investment costs for computing or networking infrastructure. This means that they can use available financial resources and personnel for other revenue producing activities or to increase working capital, liquidity or cash flow
  • Ease of storage and access of business information
  • Data backup and recovery

All of the above are basic uses of cloud computing because there is no need on the part of the small business enterprise to purchase equipment, install hardware, manage servers, maintain/upgrade software to prevent obsolescence, etc. In addition, less onsite computing equipment can also result in reduced utility costs as part of a green strategy, Cloud computing is also gaining creditability as service provider such as Amazon, Microsoft, Google and other well known companies continue to introduce new services.

Cloud Computing Visualized
Cloud Computing Visualized | Source

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However, small businesses need to be cautious ...

Cloud computing has not fully matured fully and business owners need to be aware of several technical and non-technical issues:

Weak Security - This is a critical issue in cloud computing as businesses may store critical information on IT resources outside the control of the users. Small businesses resort to using the services of third party cloud computing service providers in order to derive cost benefits but such an advantage has the possibility of being their data being compromised or stolen by third-parties breaching the security of their network or by the actions/inaction of their employees.

Customization - The need to customize cloud computing acts as a barrier for small businesses since no one plan is a fit for all small businesses. This requires small business to have some level of technical expertise to integrate their local IT infrastructure and business processes with the cloud computing platform.

Term and Conditions, Pricing. - Like most services, terms and conditions change over time. While many of these changes can be beneficial, sometimes they can also be very problematic. More importantly, depending on how integrated your business operations are with the cloud computing service provider, you may be captive to their new policies or price increases.

Video describing the benefits and risks associated with Cloud Computing

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