Reach For The Sky With Cloud Computing

That's consistent with feedback we heard from the recent Indiana CEO Survey. The survey was conducted by Butler University, with support from Ice Miller LLP and Inside INdiana Business.

Cloud computing offers some advantages that can save time and money. But it also requires your company to exercise due diligence in selecting when and how the services will be used, or not be used.

Let me explain a few of the key decision points for you, starting with a quick definition. Cloud computing is simply access to software, hardware and other computing resources through the Internet. The software and storage for your account doesn't exist on your computer — it’s on the email provider's servers and other network infrastructure, collectively known as a "cloud."

Many businesses, particularly smaller ones, find that cloud computing gives them capabilities beyond their manpower and financial range. According to a 2010 SMB Group study, "2011 Small and Medium Businesses Routes to Market," small businesses use cloud computing for online marketing (27 percent of respondents), collaboration (27 percent), contact and customer management (25 percent), business analytics (23 percent), website design/hosting (10 percent), and accounting/financials (9 percent).

Cloud computing enables small businesses to access a software/hardware space on a trial basis, without capital investment. It lets them have access to a level of support previously only available to large businesses, and leverage the knowledge and expertise of a third party’s hardware operations without needing to have that expertise in house. They can take advantage of a 24/7 work day, thanks to the Internet’s global reach, and merge different software/applications from different vendors to achieve a desired goal — say, Google Maps of a business’ location and Flickr photos of its products on a website.

Cloud computing is also highly scalable: You use only the resources needed, and you can quickly scale up and down. The importance of scalability is illustrated by what happened to Butler's website when the men's basketball team advanced to the NCAA Final Four in 2010. Previously, the University website received 5,000 to 15,000 hits in a typical day. The day the Bulldogs defeated Kansas State in a Sweet Sixteen game, however, 137,000 hits crashed the website. Our IT department scaled up the website's capabilities. After our loss to Duke in the final game, website traffic subsided ... until the next basketball season.

Now imagine that your business makes a product that is unexpectedly featured on national TV, and your website traffic dramatically spikes overnight. Instead of sinking a lot of capital into a new server, you could scale up quickly to handle the increased traffic through cloud computing.

Being dependent on a third party for part of your business can be a disadvantage of cloud computing. Before committing to the process, you’ll want to ask questions. What is the track record and reliability of the third party doing the cloud computing? Are the functions it will perform critical to your operation? Who will have access to your data virtually and physically?

Companies should take the time to practice due diligence regarding security and ask the same questions of the cloud computing supplier as they would of their in-house or other current IT capabilities. Most respondents to the SMB Group survey had high confidence in their protocols, which implies that people on their staff are aware of key security issues. There are hardware, software and contractual ways in which the same level of confidence can be obtained with external computing resource suppliers. Also, the same issues firms address when buying software packages apply to buying cloud computing services: How long has the vendor been in business? Who are the vendor's clients? What clients have left, and why?

There's also the question of expense. The key issue to consider, as with every technology project, is total cost of ownership over the lifespan of the hardware or application. Primarily, what are the costs beyond the initial startup/use? This might include labor and tangibles related to maintenance, upgrades, integration with other systems in the firm, space/facilities for computing resources, and expansion needs.

Loss of control over maintenance and updates can also be a concern. The third party can decide to impose software/hardware upgrades on you before you're ready. And be aware that when you "delete" data, it still exists in the cloud.

If firms have taken the time to thoroughly address these issues, then they can feel comfortable in their decision to use or not use cloud computing. The cloud is not for everybody or for every technology need.