Small businesses embrace cloud services

Cloud computing isn’t just for big business anymore.

The technology has matured, working out the kinks in the process and adding new services and better pricing, so small companies may now find more reasons to move some or all of their operations off site and into the ether.

“There’s not any type of business that wouldn’t be a good fit,” says Tim Averill, technology officer of Skybox Cloud LLC of Sparks.

Any business with compliance requirements, for example, says Averill, can offload the details to a cloud provider, whether it’s a physician’s office following privacy rules of HIPAA or a one-person retailer adhering to PCI security for credit card transactions. A small business with multiple offices or employees who sometimes travel or work from home may be able to provide access to programs and storage more economically if everything is located in the cloud.

Security is a good reason to join, not to avoid, the cloud, say providers of cloud services.

“We have multi-factor authentication,” says Averill, whose data center is protected by security guards, fire suppression features and retina eye scanning to enter the building. “We’re more secure than most businesses.” Skybox Cloud services are delivered from equipment located within a 500,000-square-foot data center in Sacramento and a secondary site in Integra’s Reno facility.

In addition, most cloud service providers, whether it’s IBM or a locally-operated data center, can maintain state-of-the-art equipment by spreading out the costs and employ a staff of IT specialists that boosts uptime rather than a single jack-of-all-trades working at many small businesses.

“The traditional model is the break it, fix it model. Just call me when it breaks,” says Marc Carignan, vice president of sales and marketing at Xogenous Ltd., a data center hosting service in Carson City. “But that doesn’t work today in mission critical environments.”

Carignan says the average small business loses $300 to $500 for every hour of downtime so half a day wasted because of computer glitches or lost Internet connection can cost $1,200 to $1,500.

So when does it make sense for small business to put some or all of its work into the cloud?

“It’s a balance of your needs with the cost,” says Tim Erlach, president, Erlach Computer Consulting, an IT service consultant in Reno.

Erlach says a company can look at the software it uses and see if it’s available as a service – known as SAAS – and whether all the third-party tools it uses with that software will still function. Older software may not be available in the cloud or may not work well in it. And some software providers which have optimized newer programs for the cloud may be charging a premium for it, making it still more economical to keep the application on the desktop.

If software and functionality is available, and the price is right, it’s more cost effective to use it in the cloud, says Erlach. To run an application on the desktop, a business might need 20 licenses, for example, and are stuck with them even if they cut staff or reduce the number of workers using the application. In the cloud, a business pays for the users using the software at any given time rather than a set number of licenses.

The recurring cost of running a function in the cloud can seem expensive, say consultants, until a business factors in saved costs, such as server equipment and maintenance that can be eliminated if run remotely in the cloud on the service providers’ machines. In addition, besides uptimes guaranteed in cloud contracts, the remote back-up of data means deleted work or dropped transactions are easily retrieved, boosting productivity.

“It’s a predictable, monthly investment, so a business can manage its budget,” says Carignan. “We’re just another expense item, an operational expense rather than a capital expense.”

That also means it’s an expense that can be deducted annually rather than amortized over several years, says Carignan.

So, if everything is in the stateless cloud, why should a business use a local service provider rather than a behemoth such as IBM?

To decide, a business needs to be aware of any compliance regulations about its data.

“Gaming data can’t be transferred out of the stare, so casinos have to choose cloud providers with equipment in Nevada,” says Averill.

And consultants say local providers can better serve smaller businesses, in particular, which may be outsourcing most if not all of their IT.

“It comes down to service. Locally, we can provide a lot more service than a national provider,” says Carignan. “It’s not just running it. It’s also the transition to the cloud and management of it.”