posted by on July 6, 2010 06:07 AM

For a lot of small-business owners, "cloud computing" is the latest buzzword to leave them puzzled. “Broadly speaking, any service or program sent over an Internet connection can be considered a cloud service. An outside vendor runs the servers and software, so the buyer doesn't have to worry about the technical issues in-house—and can focus on its own business,” says Rodger Cheng from The Wall Street Journal.

 However, there’s more to it than that. Cloud computing and Software as a Service (SaaS) offers a plethora of benefits that allows small businesses to engage and compete in the same activities big businesses do. Today's web-enabled world is one in which even small businesses of less than 20 people absolutely must have a Web presence, and beyond that, small-scale Web applications to deliver customer services. The good news is that all this is possible in the cloud.

SaaS is a software model that is provided by a vendor, typically on a subscription basis, and is delivered through an online service. Common software services include Google’s Gmail and SalesForce. Others include Network Solutions and Hostopia (SMB-focused domain names, web hosting, email, etc.), and TrackVia (cloud-driven online database and application platform). For SMBs, the cost of buying traditional enterprise software, procuring hardware on which that software will run, and then having skilled IT resources to run and manage that software on an ongoing basis can be overwhelming. With SaaS, a vendor takes most of that cost and complexity away, providing customers with a turnkey solution delivered over the internet, and priced on a usage-based subscription model. In the Business Week article “How Cloud Computing Can Help Small Businesses,” it’s determined that outsourcing computer applications to providers over the web gives businesses flexibility, provides significant cost savings, and helps resolve numerous capacity issues. Major benefits of cloud computing, and of SaaS in particular, include:

• Low Costs and Capital Outlays Forget about purchasing servers, server rooms, multi-tiered firewalling, 24/7 security monitoring, intrusion detection applications, or disaster recovery. By using SaaS, you don't need to invest in any of these or have a staff to take care of them. You pay for only for the capacity you need at a given time. In the traditional model, where you have the servers set up and occupying space, you pay a fixed amount whether those servers are busy or not. Services such as TrackVia, a cloud-driven database and application platform, offer user-based pricing models for as little as $20 per user per month: the more users on the system, the more you pay; inversely, the fewer users on the system, the less you pay.

• Easy Integration and Faster Time to Market Cloud applications are usually simple to use for the average Internet user and can be up and running within a matter of days or weeks, as opposed to calling IT for a solution that could take months or years. Also, many vendors provide project management teams to walk you through the migration and set-up process so you can be up and running quickly, with little or no downtime as you move from your legacy solution into the cloud.

• No Need for Commuting One of the main benefits of SaaS is that it allows small business owners to login to their applications when they’re away from the office to see and react to the latest data critical to their business. A cloud or SaaS-based solution can be accessed anywhere an Internet connection is available. With these technologies, you can work from any place you choose. There is no need to travel to the office. It allows you to effectively run your small business from home, and save both time and money.

• Automatic Updates With SaaS, businesses don’t have to worry about updates because the application provider makes these improvements on servers on regular basis and upgrades are available to users at all times. In addition, alerts or updates can be sent to a user on a daily basis so they can keep up to date on company information.

• Data Security Your data is regularly backed up onto multiple data servers in physically secure data centers. In case your computer crashes or gets stolen, you can log on to another computer with no or minimal loss of data or time. Steve Hilton, an analyst at U.K.-based research firm Analysys Mason Ltd. remarks, “The performance in the cloud is better than a solution found in a small or medium business. There's no arguing it.”

• Support Small business owners are forced to wear many hats. It’s the only way to get things done and to meet the demands of running a business. In case you need some support for the products, there is usually an administrator nearby to answer all your questions. TrackVia prides itself on this aspect of service, offering in-house support via phone during business hours for all subscribers of its Professional edition service.

• How the Cloud Sets Itself Apart There is another compelling financial reason to look at the cloud, aside from cost savings. “Although companies are reducing capital expenditures (CapEx), cloud is a service. It does not comprise hardware as far as the customer is concerned and it doesn't even really comprise software,” says Joseph Foran, Director of IT at non-profit FSW. He continues, “While it is also true that companies are reducing expenses in general, avoiding CapEx spending while reducing cost and proving ROI are a good way to pitch a solution to a real problem.” So what can be outsourced to the cloud? Just about all of your business’ computing needs. Jeremy Quittner from BusinessWeek explains, “Some businesses and consumers simply use the cloud to host productivity applications, such as e-mail, document creation and sharing, and calendars, relieving them of the time and expense needed to run and maintain the software on their own computers.” Some use it to host their own applications, but there are also entrepreneurs who use the cloud to sell services that could not have been offered before. Those who do so can capitalize on this model to build virtual companies.

Resources and Further Reading:

Belicove, Mikal. "Understanding The Small Business Cloud." Entrepreneur.com Daily Dose. Entrepreneur.com, Inc., 2 July 2010.

Cheng, Roger. "'Cloud Computing': What Exactly Is It, Anyway?" The Wall Street Journal. Dow Jones & Company, 8 Feb. 2010.

Groschupf, Stefan. "Why Small Businesses Are Using 'Big Data' - Forbes.com." Forbes Magazine. Forbes.com LLC, 4 June 2010.

Quittner, Jeremy. "How Cloud Computing Can Help Small Businesses - BusinessWeek." BusinessWeek. Bloomberg L.P., 7 Aug. 2009.