Bloomberg estimates that more than $40 billion dollars were spent on cloud services last year. That number is expected to surpass $100 billion by 2016. What these numbers point at is a move, by small companies, towards the cloud.
The business-sphere these days is dotted with small startups and mom-and-pop shops that need hosting, but don't want to pay a fortune for hardware (or administrators). So, that ever-elusive cloud seems like the best possible option. But, the question remains: can the cloud save you money?
Small Business cloud Advantages
Cloud companies offer two things that are hard to beat: convenience and low startup costs. If you run a small business, both of these things are vital. Comparatively, setting up your own hardware and hiring someone to manage that hardware could cost a 50-person business around $25,000 (according to a recent WSJ interview).
A lower-cost option like a cloud service might run you $10,000 if you run a business that consists of around 50 people. That's an $7,000 per month savings. To a small company, $7,000 is a big deal. The cloud is undeniably appealing and cost-effective, but not without major drawbacks.
Low Costs and High Drawbacks
The biggest drawback to opting for the cloud is a completely lack of control. Any information stored in a cloud is processed far away from a company's headquarters, in most cases. Unlike hiring an IT expert, trying to control cloud operations can be a losing battle.
The other major cloud drawback is that things aren't always sunny in the cloud. Last June, many Amazon users were caught off-guard when the company's generators in North Virginia were hit by an electrical storm. These generators were immediately shut down, preventing companies thousands of miles away from accessing data. This caused some companies to re-think cloud services.
Is the Cloud Worth the Constant Panic?
Sure, setting up a account on cloud can save your / company lots of money. Only, is all the headache that goes with a cloud service worth the money saved? Analysts are pointing to a hybrid of cloud and on-site IT services as being the best option. Not only do companies not have control over a cloud service, but many clients don't like the idea of a cloud either.
The Client Struggle
Few people understand cloud services. Trying to take what little information is known about a particular cloud service and selling that information to a client is tough. This is especially true if the majority of your clients are not familiar with the Internet or with terms like “cloud.”
Attempting to explain to someone how the cloud works is hard, but, more than that, people don't trust the cloud idea. Elderly clients, in particular, are a hard sell. Companies tend to lose business based on trying to sell the idea of information stored in a cloud to those over the age of 70.
Elderly clients want to know where information will be stored, and that's a tough concept to grasp when data is stored in a cloud somewhere far, far, away.
Cloud Service: Adding It All Up
Should you go cloud all the way? Before you think about costs, think about your clients. Can you sell the idea of a cloud service to your clients? It all depends on your target market. If you can sell the idea of a cloud, the savings potential is huge.
Just keep in mind that the cloud isn't always a sunny place. Data is stored somewhere (whether or not you know where that is), and that means that your data is susceptible to everything from lightning storms to hacks.