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SMEs embracing new opportunities in cloud computing

It can be argued that the beginnings of cloud computing can be traced back to when Salesforce launched its automation software as a service. Indeed prior to this, most businesses of any size were content to buy software that needed to be installed on servers located at the business’ premises. As history tells us today, cloud computing is not restricted to a specific industry or category of business.

Nowadays small-to-medium businesses continue to embrace the new opportunities that cloud technologies can offer. Companies in the Asia-Pacific region (excluding Japan) are expected to invest US$11.4 billion into cloud computing solutions, according to the latest research conducted by AMI Partners.

AMI predicts the market for cloud solutions will grow at more than twice the rate of traditional ICT technologies in 2011 in the Asia Pacific markets. In addition, this region is expected to lead worldwide expansion of cloud computing markets, thereby providing ICT vendors with a strong, sustainable growth potential.

With increasingly favourable economic and infrastructural conditions, countries in the Asia Pacific region, including Australia, provide strong annual growth potential. The proliferation of broadband Internet and high-speed mobile networks provides SMEs with more options to access cloud solutions, allowing a completely new segment of SMEs to adopt ICT functionality for the first time.

What is cloud computing?

Research company Gartner defines cloud computing as “a style of computing where scalable and elastic IT-related capabilities are delivered as a service to consumers using internet technologies.” An early analogy for cloud computing is the utility industry where consumers pay for their electricity water or gas on a consumption basis. Consumers do not need to know the source, nor do they care. What is important is that the service remains uninterrupted and is available on demand.

Similarly, cloud computing services are delivered on a pay-per-use model. Customers connect their client computing devices to the cloud service provider via the internet. The service, whether messaging, business application, storage capacity or computational resources, flows uninterrupted and customers get paid for services consumed at the end of the billing cycle.

In recent years, the popularity of the hype surrounding cloud computing has also made the term a catch-all-phrase for other services that are delivered via the internet. These include shared web hosting, messaging and collaboration solutions, virtualised infrastructure services, and software-as-a-service (SaaS).

  • Shared Web Hosting refers to the building and managing of websites without the need to have in-depth technical knowledge of servers, email, or databases.
  • Enterprise-class messaging and collaboration solutions enable companies to use email, voice and calendar to run their daily operations.
  • Virtualised Infrastructure Services refer to off-premise IT infrastructure without the cost and resource burden that the typical in-house IT department incurs.
  • Software as a service (SaaS) refers to business applications that are accessed via the internet and for which customers pay on a per user, per month basis. Customers do not have to worry about buying servers to host the application or managing the application, including patches and upgrades.

At the heart of any cloud computing service is the concept of shared resources. Vendors that sell cloud computing services may decide to package their service at a relatively low cost to the individual customer. But each customer loses the right to exclusive access to the application delivered as a service. As a shared service, a customer understands that he is just one of many thousands of customers using the same application.

One critical tenet of cloud computing is data privacy by which the vendor guarantees that your data remains exclusive to you alone. In fact, cloud service providers take great measures to ensure that your data is kept within secure containers that only you and your authorised users can access.

Why is cloud computing good for my business?

Cloud computing offers SMEs a number of benefits one of which is the access to enterprise-class compute resources without the enterprise price tag.

Low total cost of ownership: Most enterprise-class business applications like CRM or ERP are expensive to acquire, install and maintain. In a cloud computing model, these applications become very affordable from day one.
You don’t have to invest in a data centre, including servers, storage and software. Since you don’t own any hardware or software, obsolescence is non-existent. You don’t have to sign annual maintenance contracts and neither do you need to worry about software patches or version upgrades.
The only requirements are client devices like PCs and laptops. Even the network switch is supplied by your ISP. Just to be clear, peripheral devices like printers and scanners are not typically part of a Cloud service contract.

In a recent survey conducted by Enterprise Management Associates (EMA), six in 10 cloud computing customers say that they have been able to reduce their IT capital costs. The survey also shows that cloud deployments help improve service quality, reduce IT operations costs, and reduce IT management complexity.

Higher productivity gains: SMEs are notoriously frugal when it comes to investments where the return on investments is not obvious. Most small businesses already outsource their IT needs to a third party, and often complain about the time-shared service. Mid-sized businesses that have an internal IT team often complain about the time spent on support and maintenance. Imagine freeing up those resources to develop business applications. When you outsource to a cloud service provider, routine IT and network management tasks are performed by your provider.

Flexibly scale up or down: Cloud computing is patterned after a utility business model where you use only what you need. Most businesses are cyclical in nature. And this fits very well into the cloud model. When you need additional resources, you just ‘rent’ them. As soon as your business goes back to normal, you scale back on your compute rental. You will not see servers sitting idly in your data centre. It is a true pay-per-use model.

So how do I sign up for cloud computing?

Cloud computing is a paradigm shift in the way companies use technology. As such you will need to plan for this very carefully. Every business owner will need to change the way they think about IT. Many SMEs that start on the path to cloud computing do so with few or no legacy on-premise applications.

  • Start small

Because scalability is an intrinsic attribute of cloud computing, start small. Identify one area of your computing needs to test the waters. The two most common applications companies begin with are email or website.

  • Minimise your risks

Every choice/option   involves a risk, including cloud computing. Find a reliable hosting or Cloud service provider by asking your business partners or peers for some recommendations. Check online forums for reliable hosters with good service track record in your locality. Ask them about their backup and recovery services in the wake of disaster?

  • Evolve your strategy

As you pick up experience, evolve your cloud strategy. Plan to roll out other services into the Cloud bearing in mind that there is no need to rush through the transition process

We are still in the early days of cloud computing. But many companies of all sizes and shapes are already harnessing the power of cloud computing to their benefits. AMI Partners predicts the ASEAN region to hold the fastest opportunity for cloud computing services. Their findings also show that once a company has started its journey into the cloud and has deployed the first-use case successfully, they are very likely to explore broader use of additional cloud infrastructure and application solutions.

John Eng is VP Marketing and Alliances, Parallels Asia Pacific.

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Lorna Brett

Lorna Brett

Lorna was Dynamic Business’ Social Web Editor in 2011/12. She’s a social media obsessed journalist, who has a passion for small business. Outside the 9 to 5, you’re likely to find her trawling the web for online bargains, perfecting her amateur photography skills or enjoying one too many cappucinos. You can follow her on <a href="https://twitter.com/#!/dynamicbusiness">Twitter @DynamicBusiness</a>

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