How Small Businesses Are Benefiting From Cloud Services

July 22, 2013 8:30 am3 comments

cloud computing

For decades, large companies held a significant advantage over small businesses when it came to IT.  Massive enterprises possessed the deep pockets to acquire powerful servers and install sophisticated storage and network hardware.

However, cloud services are leveling the playing field as smaller organizations no longer have to invest considerable cash towards the purchasing of servers, data center infrastructures, and storage devices.  The cloud is enabling small business to obtain computing and storage capacity at reduced costs.

As a result, cloud providers are significantly increasing their revenues. For instance, Microsoft’s Azure product line allows businesses to use a flexible cloud-based infrastructure.  Azure recently hit the $1 billion mark in annual revenue and has seen an increase in subscriptions by 48% since 2012.  The industry’s biggest player, Amazon Web Services (AWS), currently dominates the sector and is projected to earn over $24 billion in annual revenue by 2022.

Cloud services enable small business owners and their employees to access files on any device, anytime, anywhere in the world.  Additionally, small businesses can back up their files via the cloud instead of having to invest in data storage and backup hardware at off-site locations.

Server and workstation crashes have typically been the Achilles heel for smaller organizations, most of which lack the IT expertise to quickly resolve downtimes.  Such disruptions often result in angry customers and closed accounts.

By outsourcing much of their IT requirements to huge players such as Amazon, Google, and Microsoft, small businesses can leverage a provider’s immense resources to combat security threats and vulnerabilities, such as hackers and malware.  Google’s recent entrance into the cloud industry should also place pricing pressures on established players.  Given that cost control is a major variable for small business owners, Google’s cloud services should serve as a viable alternative to cost-conscious operators.

“[We agree] that while most enterprises move to the cloud initially for financial reasons, [but] they also find that the downstream . . . benefits greatly exceed the financial savings with enhanced agility, improved speed to market and IT transformations that enable significant competitive advantage”, said Rob Farris, marketing executive with California-based Echopass, which provides cloud-based contact center solutions.

Earlier this year, Echopass announced a successful implementation of cloud data services with an internet retailer.  According to their marketing director, Gil Cattelain, their client “has experienced significant savings of over [$5 million] each year in their total cost of ownership … and ongoing operational system return on investment”.

What business pressures are driving organizations to embrace the cloud?  A 2011 study by McKinsey discloses the following reasons (in order of priority):

  1. Increased business flexibility
  2. Ability to scale IT infrastructure to meet business needs
  3. Lower unit cost of IT
  4. Disaster recovery and business continuity
  5. Other

When a small business’ product or service adds value to the marketplace, demand often explodes.  It is after all a global marketplace.  Added flexibility enables business owners to do what they do best.  For most, it’s not IT.

Image: iStockphoto

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Marv Dumon
Marv Dumon covers current events for several news sites. He previously worked in corporate finance and Six Sigma. Marv holds BA, BBA and MPA degrees from the University of Texas at Austin. | [email protected]
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