Why Some Small Businesses Should Move to the Cloud

Cloud computing technology has the potential to transform the budgets of small businesses. Emily Maltby of the Wall Street Journal predicts that an increasing number of small businesses are moving towards cloud computing in her article “"Small Companies Look to Cloud for Savings in 2011”. The reason why cloud computing is an appealing idea to small businesses is because it is an opportunity to dramatically reduce expenses. Expenses such as buying servers, paying IT personnel to perform maintenance and buying expensive software for the servers could be eliminated by the use of cloud computing services that are not only lower in cost, but offer more advanced technology (Price).

The pricing of these services are what makes them an excellent opportunity. Because of their economies of scale, companies such as Microsoft, Amazon and Google can offer cloud services at a very low price. Business owners can opt to purchase a set data package for a price, or a package that charges by the hour, sometimes around $0.48 per hour for a large Windows-based cloud from Amazon, but it varies depending on the package (Amazon Web Services). Compared with the costs of running an IT department, these flat usage based fees offer an easier and less expensive way to use internet technology in small businesses.

The technological implications of cloud computing are also very important to small businesses. The cloud computing services can also include subscriptions to software packages that make them affordable for a small business, thereby opening up the technology of companies like Google to small businesses (Amazon Web Services). For small businesses, access to these software programs provides additional resources that their own IT departments could not develop.

Despite the economic and technological benefits of cloud computing, some people are skeptical about whether storing information in a cloud is safe (Clayton). From a risk standpoint, the security of cloud computing depends on the company’s internal information security system. When a small business subscribes to a cloud computing service, they receive login information based on how many people they indicated need access to the information. If small businesses are concerned with people hacking into tech giants such as Microsoft, Amazon, and Google, they have to consider the fact that these companies specialize in technology and informational security. The information that small businesses store in a cloud is most likely safer with Microsoft than the small business’s own servers. Klaus Andersen of Microsoft said that, “If you look at Microsoft in terms of the number of people who try to hack us, there is only the U.S. government that is hacked more often than we are…so far nobody's got through" (Clayton).

Because of the limited resources and smaller budgets of most small businesses, it is very important for a small business to evaluate whether cloud computing would add value to their operations. However, cloud computing does fit with most small business models. Because the services are usage based, if a small business does not use the cloud computing service for a month, then they are not charged for anything. Cloud computing also eliminates capital investment in technology for the company. The technology of cloud computing also safeguards information in a remote location so that even if the company suffers a natural disaster, the company will not lose all of their information.

The small business that have the most to benefit from cloud computing are new startup businesses. If a company starts on a cloud, there are not transition costs from moving data from company servers to the cloud, and there is no investment in labor and capital such as hiring IT personnel and buying servers. With the recovery of the economy, more and more small businesses will start up and a huge competitive advantage would be if they invested in a cloud computing service. The flexibility of these services allows for increased usage as the company grows, and decreased usage with no penalties.

Overall, small businesses should evaluate their strategies and long-term goals and decide if an investment in cloud computing would save money, and if the technological benefits that cloud computing services provide could enhance the small business’s operations. Especially for companies that spend large amounts of money on IT maintenance and capital, cloud computing may be a safe and easy tool to save money.

Works Cited

"Amazon Elastic Compute Cloud (Amazon EC2)." Amazon Web Services. Web. 20 Feb. 2011. .

Clayton, Nick. "Get Off My Cloud: Businesses Remain Deeply Skeptical about the Benefits of the Cloud, Especially When It Comes to Security." Business News & Financial News - The Wall Street Journal - Wsj.com. 15 Feb. 2011. Web. 19 Feb. 2011. .

"2010 « Cloud Computing Economics." Cloud Computing Economics. Web. 20 Feb. 2011. .

Maltby, Emily. "Small Companies Look to Cloud for Savings in 2011 - WSJ.com." Business News & Financial News - The Wall Street Journal - Wsj.com. 29 Dec. 2010. Web. 18 Feb. 2011. .

Price, Michelle. "Pinning Down Cloud Computing." Business News & Financial News - The Wall Street Journal - Wsj.com. 15 Feb. 2011. Web. 20 Feb. 2011. .