Last month I wrote about the importance of disruptive leadership and how to leverage emerging technologies to gain an advantage in business. That post introduced readers to Xero, a developer of accounting software who transformed itself from startup to an industry leader with $60M per year revenues in less than eight years. Xero’s disruption of the accounting software industry is due to its foresight and ability to exploit an emerging technology that none of its competitors had embraced: cloud computing.
You have no doubt heard of cloud computing. While the phrase remains a buzzword in today’s technology headlines, the technology itself is nothing new. Internet banking, online shopping, and web-based email are all forms of cloud computing. The term simply refers to the transformation of the way software is bought and delivered. Historically, software was something you bought and installed in your office, whereas today software can also be regarded as service you can rent and use online.
There are a wide variety of software solutions that can be delivered via the cloud. For instance, Microsoft Office has put productivity software in the cloud. Intuit responded to Xero’s move and now offers Quickbooks in the cloud as well. Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) platforms are also now available in cloud versions providing small businesses with access to tools once reserved for big businesses with big budgets.
There are four primary benefits associated to cloud-based software:
1. Elimination of Up-Front Costs. Think back to the last time you purchased software. How much money did you invest up-front? It is likely that the purchase required thousands of dollars in up-front capital investment. Cloud subscriptions, by contrast, typically do not require up-front fees for acquiring the application. Microsoft Office 365 Small Business, for example, can be acquired for as little as $5 per user per month.
Applications used in the cloud may also eliminate the need for expensive server or network hardware. Subscription fees are predictable and often paid monthly. You have the ability to scale up or scale down as needed allowing your software to adapt to your business. As a result, the software becomes an operational expense, not a capital investment.
2. No Installation or Maintenance. Because the software is online, you are not responsible for installing, maintaining or updating it. All maintenance is provided by the software vendor so you always have access to the latest feature enhancements and security updates released by the vendor, and you lower the overall internal management cost associated with use of the software.
3. Minimize the Risk of Data Loss and Breach. A typical question is “Is my data safe in the cloud?” The truth is your data is much safer managed by cloud providers than managed on premise within your office. Cloud providers spend millions of dollars and hire experts to ensure the data hosted within its infrastructure is safe and secure. This is better security than any small business could ever hope to afford. Cloud providers routinely run disaster recovery tests on their systems. When was the last time you performed a full disaster recovery test on your in house system?
4. Work and Collaborate from Anywhere. Today’s professionals work from home, airports, hotels, and more. To be most productive, they need access to real time data and the latest versions of their working documents. Most cloud-based software applications require only a web browser and internet connection to connect you to your documents and business information. Regardless of where and when you choose to work, you can have access to all your systems. Cloud workspaces can be shared with other members of your organization enabling workers to work collaboratively and in real time on documents without the need to email versions back and forth and struggle to keep track of which version is the latest version.
There are certain considerations that should be made before moving any application to the cloud. First and foremost, cloud applications are only as reliable as the internet connection that connects you to them. Consult with your IT expert to evaluate how the solution will perform in your environment. You should also obtain input from individuals throughout your organization who will be using the software. Weigh the cost benefits and risks associated to the use of the application in the cloud. Sometimes the cloud version of a software suite has limited functionality when compared to its on premise version. Pay attention to features offered and ensure that your users will have access to all the functions they require. Lastly, have those in charge of compliance review service level agreements to make certain the proposed solution meets all security and compliance requirements for your industry. Used correctly, cloud computing can revolutionize the way small businesses benefit from technology.
