For small and midsize companies, cloud computing offers enterprise-class or even better, consumer class -- applications for far less than enterprises pay to do it themselves
If cloud computing offers significant benefits to IT departments in the enterprise, it's an absolute godsend to small and midsize companies. Instead of making do with a small, under-resourced IT staff trying to emulate the productivity of billion-dollar IT outfits, smaller companies can now access enterprise-class solutions with limited up-front costs and easy scalability.
Don't Miss: InformationWeek's Demystifying the Cloud
Important as this is, though, cloud computing is only the first step in an even larger tectonic shift in the technology world. Cloud computing doesn't just level the playing field -- it promises to tilt it in the other direction.
Simply put, today's best, most powerful, and most innovative technology is no longer to be found in the enterprise. Google VP and enterprise GM Daven Girouard looked back on how it used to be at a recent product announcement. "20 years ago, you had access to the best technology in the workplace," he recalled. "You had a T-1 line to access the Internet at the office, for example, then went home to watch three channels of TV."
Those days are gone. Today, the cloud makes leading-edge technology available to everyone, including consumers, often at a far lower cost than businesses pay for similar or inferior services.
Hard to Beat Free
Compare a typical Exchange server -- offering perhaps 500MB of email storage -- to Web-based email services that offer up to 7GB of storage. Free. (Google's corporate version offers 25GB per user for $50 a year. And don't forget Apple's just-announced MobileMe service, which costs $99 per user per year but doesn't require any infrastructure.) Compare enterprise content-management systems with easier-to-use and more-flexible cloud-based publishing/sharing systems like Blogger, Flickr, and Facebook. They're free, too.
Those comparisons may not be relevant to the enterprise, but they are to SMBs. According to Michelle Warren, senior analyst at Info-Tech Research in Toronto, while large enterprises typically turn to the cloud for things like storage or disaster recovery (or for departmental requirements like CRM or HR), day-to-day cloud computing applications are more appealing to SMBs.
Many smaller companies don't really care about infrastructure, adds Agatha Poon, Senior Analyst, Enterprise Research at Yankee Group, and "have no idea what cloud computing is about." But they are driven to outsource applications to meet their business needs.
Apps Are in the Office
Ultimately, companies large and small may have little choice. As workers become accustomed to high-powered cloud applications available in the consumer space, they are sneaking them into the business environment whether IT departments are ready or not. While most corporate IT departments resist Instant Messaging, for example, rank-and-file users find creative ways to introduce IM to the workplace because they don't want to live without its proven business benefits just because they happen to be at the office.
Cloud computing concerns remain, of course. Warren advises SMBs to look for providers who deliver adequate security and support -- and be willing to pay for it when appropriate. Yankee Group's Poon warns SMBs not to underestimate network bandwidth expenses and to make sure their providers will be around for the long haul.
That's important, because there seems little doubt that over the long term cloud computing will supply more and more of smaller companies' technology needs, helping them avoid the costs and complexity of an in-house applications and infrastructure.
The only question is when. While Poon sees technology startups as today's pioneers in this area, she says traditional SMBs still face a steep learning curve on cloud computing. And she cautions that "it's going to take some time to see if the cloud model works and if it's mature enough" to fully support even smaller businesses.
Warren is more bullish. "We're moving toward a world where IT is outsourced," she says. "Maybe not 100%, but 95%. I think it will happen more in the SMB than in the enterprise, for sure."
See more columns by Fredric Paul
Fredric Paul is publisher/editor-in-chief of bMighty.com and SmallBizResource.com. This column is adapted from a sidebar in InformationWeek, "SMBs Will Rise To Cloud Computing".
