Cloud services adoption and growth benefits for small businesses

¶ … Cloud Services to Business

For small businesses the urgency to get new products and services to market quickly and cost-effectively, stay ahead of customer expectations for service and support, while growing their businesses at the same time taken together form a strong catalyst for adopting cloud services. Small businesses, and increasingly enterprises of all sizes, need to invest all available resources in new product development, managing customer relationships and new business expansion instead of Information technologies (IT) departments. For small businesses that are growing faster than their industries, this is especially the case as their growth trajectory often includes opening up regional, national and global offices as their products and services find increasingly larger audiences and customer bases.

Early adopters of cloud services are most often in high growth industries that are knowledge-based or dependent on the accuracy and speed of information sharing (Aljabre, 2012). As a result, the fastest growing small businesses are highly reliant on IT systems to fuel their growth, yet don't have the budget or expertise internally to support it. Cloud services alleviate the need of bringing in an entire IT staff and the related costs and time of getting up to speed on operating systems, applications and the intricacies of keeping hardware systems and servers running reliably. These costs and time drains are multiplied across the locations of a small business, accentuated by the geographic dispersion of locations, the need to stay responsive and support new customers while winning new ones, and ensuring knowledge continues to flow throughout the company. Taken together, these factors are making cloud services a viable option for small businesses, alleviating the costs of creating and maintaining an IT department and staffing it with professionals who often earn premium salaries. Cloud services is putting small business owners back in control of their budgets and time as a result. The larger the business, the greater the benefits of minimizing these costs and the additional time spent on managing complex IT projects. The intent of this analysis is to illustrate how cloud services are enabling small businesses to grow and prosper while staying aligned with their customers and increasing the accuracy and quality of collaboration internally.

The Compelling Case of Cloud Services for Small Business

Enterprises of all sizes are benefitting from cloud services today with small business gaining the greatest advantages, given their limited resources. Research and advisory firms studying the adoption of cloud computing agree that small and medium businesses (SMB) spending on cloud solutions will grow by almost 20% over the next five years, with 3 in 10 midsize firms adopting public cloud solutions (Columbus, 2013)

Cisco predicts the U.S. SMB commercial-services market addressable by service providers will grow to more than $200B by 2015 (Columbus, 2013).

Cisco has also analyzed the differences in the fundamental nature of each size of business and how these affect IT behavior, more specifically the adoption of cloud computing. Figure 1 provides an overview of how the size of a business often dictates the amount of IT resources they have, their level of IT service purchase, and most importantly IT purchase drivers and IT behavior. The smaller the business, the fewer the IT resources, with very small businesses (1 -- 19 employees) have limited or not ITY resources and small businesses (20 -- 99) having very few IT resources. As a company gains more employees and enters into the medium classification (100 to 999 employees) an IT in-house staff becomes necessary to manage the large-scale enterprise systems.

Figure 1: Cisco's Assessment of how Company Size Impacts IT Behavior

For very small and small businesses, time-to-market and speed of response to market opportunities and threats can often mean the difference between staying in business and growing or not. Choosing to use cloud services saves very small and small businesses from wasting valuable time and money managing IT, when they can invest those resources in growing their businesses instead. The following is an analysis of the key factors driving cloud services adoption in all enterprises, with specific attention to small businesses.

Cloud Services Solve the Problems of IT Availability, Security and Stability

Cisco's analysis and many others regarding SMB cloud computing adoption (Columbus, 2013) indicate the very small and small businesses can gain greater application uptime or availability, better security and more stability of application upgrades by relying on a cloud-based application suite than attempting to keep IT up and running entirely on their own. Security of a cloud-based financial accounting and reporting systems is superior to their on-premise counterparts due to advanced authentication technologies in place to limit who get gain access to the data, and the servers themselves being in a centralized, highly secure location (Turner, 2013). Contrast this to the typical situation in a very small, small or medium business where the accounting systems are running on laptops or at best, a small server often in an unprotected office or small closet in the company. Entire small business accounting systems have been stolen in burglaries where laptops and servers are taken due to their high resale value, with the complete accounting records on these systems destroyed. More sophisticated criminals hack into laptops and servers stolen from small businesses and gain access to the banking, savings and lines of credit that small and medium businesses, seeing that data as far more valuable than the actual hardware (Gupta, Seetharaman, Raj, 2013). This is the risk very small and small businesses take in choosing to create a makeshift IT department in their companies; there is the ever-present risk that the hardware will be stolen and sold or worse yet, the internal information will be compromised and far greater losses will occur (Turner, 2013).

Cloud-based services including all Software-as-a-Service (SaaS)-based accounting and financial management applications are protected through multiple layers of authentication and login security algorithms and validation screens. Defining access to the most valuable data in a small or medium business by the role and information needs of each person in a small business is a best practice that is attainable with cloud-based applications, yet very difficult to do with traditional on-premise applications (Garrison, Kim, Wakefield, 2012). In addition to limiting who can see and use which accounting and financial data, cloud-based accounting systems are monitoring every activity and can quickly track or audit every transaction which provides an entirely new dimension of security as well (Mell, Grance, 2010). Only the largest enterprises are capable of accomplishing this level of audit and traceability that the smallest business can afford and get immediately when they become customers with a cloud-based application provider. Small businesses get the sophistication of authentication and security of much larger, better staffed organizations at a fraction of the cost. This shift in economics is pervasive across every aspect of software, further propelling the growth of cloud services in very small, small and medium businesses especially (Columbus, 2013).

Having applications available and stable, including up-to-date with the latest software patches and new features is one of the most time-consuming and problematic areas of IT departments globally. The constant focus of IT managers and even CIOs on making sure the systems their companies rely on to operate are available, stable and up-to-date with the latest patches and features can easily consume a 40 to 50 person department. For very small, small and medium businesses, this is not an option. Cloud services providers are building their business models around these needs, providing Service Level Agreements (SLA) that include very specific benchmarks of availability or up-time performance, stability of each application subscribed to or used, and a plan or schedule of when new software updates will be provided (Aljabre, 2012). SLAs are also increasingly including metrics of security performance, including defining how any attempted intrusions into an account are managed and reported. All of these factors taken together are deliberately designed to provide small and medium business owners with insight and visibility into how the cloud services providers are operating.

Salesforce.com is a leader in cloud services for businesses of all sizes. This company is visionary in how they are managing their relationships with very small, small and medium businesses. When the company had an outage that impacted their customers, CEO and founder Marc Benioff created trust.salesforce, com. Figure 2 provides a screen from the website Salesforce provides to give it customers real-time updates on cloud system performance.

Figure 2: How Salesforce communicates the stability of each server or instance of their best-selling CRM cloud service

Source: http://trust.salesforce.com/trust/status/

The Compelling Time-to-Market and Economic Advantages of Cloud Services

For very small, small and medium-sized businesses the opportunity to more efficiently use their time attracting new customers and serving the ones they have often is predicated on getting new products and services launched successfully. At the center of these efforts is solving the perpetual challenge of sharing information internally and in fast-growing small business, across broad geographic regions. Of the many types of information critical to fueling a small business's growth, customer data is often the strongest catalyst of all (Gupta, Seetharaman, Raj, 2013). The urgency of getting customer data quickly shared and acted on within a very small, small or medium business is one of the most powerful accelerators there are for enabling greater growth. These factors are what is fueling the rapid adoption of SaaS-based applications throughout all sizes of businesses as is shown in Figure 3 below.