- Cloud computing is a more modern approach to handling long-running business needs.
- Broadband internet and smart mobile technology have made cloud computing possible.
- There are numerous ways that cloud computing benefits small businesses. It stores and backs up company data, it runs software applications, and it streamlines how information is shared.
- This article is for any small business owner that is interested in the efficiency and cost-effectiveness of cloud computing.
With the advent of broadband internet, cloud computing has allowed for many of today's business needs to be handled more efficiently in a faraway server rather than on your company's in-house equipment. If your business relies on Dropbox to store files, uses Slack to facilitate communication within the company, or taps into Salesforce to manage customer relations, you already use some form of cloud computing. With an in-depth explanation of the concept, your small business can harness cloud computing to streamline operations.
What is cloud computing?
In today's ever-changing business climate, small business owners must get what they need right when they need it, whether they're on their computers, tablets, or mobile phones – or in the office, out in the field, or on the road. Cloud computing gives users access to data wherever they have an internet connection.
Key takeaway: Cloud computing is a digital service that allows users to access important programs and data stored on a remote server anywhere they have an internet connection.
What is cloud computing used for?
Cloud computing is an umbrella term for different types of cloud services, including:
- Cloud storage: These services store and back up your files for regular access. Files can also be shared and synced across devices.
- Cloud backup: While cloud storage and cloud backup may seem synonymous, cloud backup is designed to serve as a failsafe solution if your company experiences a server crash, cyberattack or other data loss. [See our guide on the best cloud storage or backup service for small businesses.]
- Software as a service (SaaS): SaaS solutions use the web to provide a service. Examples of SaaS application include Office 365, Google Apps, QuickBooks Online and Salesforce. SaaS solutions may also be called platform as a service.
- Cloud hosting: These solutions facilitate multiple types of information sharing, such as email services, application hosting, web-based phone systems and data storage.
Key takeaway: A cloud solution can handle numerous business-related tasks, including web hosting and file storage.
What are the benefits of cloud computing?
Cloud computing saves businesses time and money by boosting productivity, improving collaboration, and promoting innovation. Here are five additional benefits small and midsize businesses can realize from cloud computing solutions:
Extremely accessible data
Businesses use cloud computing to access information anywhere with any compatible device. Rather than storing information on your computer or a server in your office, cloud computing stores data on the internet. Information is available from a central web-based hub that gives anyone with proper credentials access from any location with an internet connection.
Maintains consistency between users
When multiple workers are working on the same digital file, it's easy for mistakes to happen. Since cloud-hosted files exist in the same central location, data is automatically synced between all devices, which means people are using the most up-to-date version of files.
Allows for remote programs
Businesses rely on software that isn't commonly used at home. Since specialized software is often installed on company computers in the office, cloud computing allows users to access all types of files and applications as though they were in the office. By removing the barrier of entry for employees to use the programs they're comfortable with, regardless of where they are physically, cloud computing brings the office to the kitchen table.
Easy data backup
Catastrophic data loss can happen at any time. Whether that loss occurs from natural disasters, power surges, or hardware failure, affected companies are at increased risk of bankruptcy within the same year as the data loss. And while most companies have adopted backup plans, it helps to have additional contingencies in place. By utilizing the cloud to store important data, business owners can rest easy knowing that important files are safe even if hardware fails.
Cost-efficient
Buying and maintaining server equipment requires time, expertise and money. Rather than building your own bespoke server, which can be prone to downtime, a cloud computing provider stores data for you without all the downsides. Prices for business-oriented cloud services are still a monthly expense, but it's a manageable and predictable expense in many aspects.
Key takeaway: From cost-efficiency to remote access, cloud computing can help small businesses operate more effectively.
What types of cloud services do businesses use?
Cloud-computing services range from data storage to functional programs, including accounting software, customer service tools and remote desktop hosting. These services can be categorized into three groups: infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS).
Infrastructure as a service
IaaS replaces physical hardware like in-house web hosting servers. By providing things like virtual servers or virtual machines, IaaS helps businesses take advantage of a range of configurations to handle different workload needs. Two of the key players in this field are Amazon Web Services and Microsoft Azure.
Platform as a service
Through this cloud service, software developers are given access to cloud-based tools like APIs, gateway software or web portals. Services like Salesforce's Lightning, the Google App Engine and AWS' Elastic Beanstalk are popular solutions.
Software as a service
SaaS gives users access to software over the internet. Accessible through computers, as well as internet-enabled mobile devices, SaaS applications let workers collaborate on projects, download important files and work directly on specialized computer programs. Services like Microsoft Office 365 or Google Workspace are examples of SaaS applications.
Key takeaway: Most cloud services are categorized as infrastructure as a service, platform as a service and software as a service.
How do cloud services store their data, and how secure are they?
The security of your business files is paramount. There are three common ways that cloud services store their data and host services: public, private and hybrid cloud. Cloud services potentially pose a security risk if you choose a service whose storage model doesn't align with the size of your business and its needs.
Public cloud: A public cloud service is built on an external platform run by the provider. With this off-site service, users get their own cloud within a shared infrastructure. The cloud provider offers everything from system resources to the security and maintenance of your cloud system. Since it is managed by an outside company specializing in cloud services for a range of customers, a public cloud system is great for organizations that want more elasticity, cost-effectiveness and the latest technology.
Private cloud: A private cloud service is a cloud platform built within your own walls using your hardware and software. Since a private cloud is managed by your own internal IT team, it is ideal for businesses that want exclusive access, more flexibility and greater control over their cloud. However, this is a more expensive option.
Hybrid cloud: A hybrid cloud employs both private and public clouds. In a hybrid system, an organization's own IT team manages part of the cloud in house and the rest off-site. For instance, a hybrid cloud system is perfect for an organization that wants to manage business-related data (such as customer files) in house but wants to store less-sensitive information with a third party.
Key takeaway: The three main cloud-storage service options are public, private and hybrid clouds. It's imperative to choose a service that aligns with the size and needs of your business.
What is the difference between cloud hosting and traditional web hosting?
Rather than relying on services that utilize physical server space to handle a client's web hosting needs, cloud hosting companies use virtual space that can be scaled up or down at a moment's notice.
How dedicated or shared traditional hosting works
Within the traditional hosting space, services are either dedicated or shared. Each option has its merits.
Dedicated hosting requires that a client pays for an entire server, which has its own amount of processing power, bandwidth, memory and hard drive space. Dedicated hosting can be expensive.
With shared hosting, companies share a single server. Each user pays for a specific amount of storage space on that server and shares in the bandwidth.
Shared hosting costs less than traditional hosting, but the trade-off is that the website may be slow to load, because the web traffic for multiple companies is being supported by the same server. Further, if your website exceeds the shared service's limitations, you could be charged extra.
How cloud-based web hosting works
While traditional web hosting relies on physical server space, cloud-based hosting carves out virtual server space for each user. Services use a "pay-as-you-go" model, with the hosting bandwidth load spread across multiple servers. Since multiple servers handle each hosted site, downtime is rare, barring a massive power outage. If one website has a problem or experiences a high volume of visitors, other sites on the same service aren't affected.
Key takeaway: There are pros and cons to dedicated and shared web hosting. With dedicated web hosting, businesses pay for a single server for their needs, while with a shared web hosting option, multiple businesses share a server. Dedicated hosting is more costly. Shared hosting is cheaper, but your website may experience slowdowns, resulting from traffic that is going to all of the sites you are sharing the server with.
How much does cloud computing cost?
The cost of cloud computing varies greatly, depending largely on the type of cloud service you need.
Cloud storage and file-sharing services like Dropbox start with free accounts, but paid plans with advanced features start at $20 per user, per month. Cloud backup and recovery services like Carbonite can cost $50 per month.
Amazon Web Services offers a range of cloud services. The company offers some free tiers (storage and time limits apply), and others are available on a pay-as-you-go basis.
Cloud-based software pricing also depends on the industry. Other factors that affect pricing include the number of users, how you will launch and distribute the software across the company, and priority tech-support options.
Key takeaway: Cloud computing service costs vary depending on several factors, such as the number of users you have, how many features and tools you need, and how much support is offered.
What are the drawbacks of cloud computing?
The drawbacks of cloud computing are twofold. First, implementing any new technology requires training personnel and establishing an effective troubleshooting system during and after the launch. You may also encounter resistance among your employees, especially those who are unfamiliar with cloud technology.
Another concern about cloud computing is security. No business is safe from a cyberattack. Business owners are especially concerned about how safe and secure their information is when it's stored in the cloud. The key is finding a reputable cloud service provider, asking about and understanding its contingency plans in the event of a security breach, and taking steps on your own to bolster security.
Key takeaway: Training and security concerns exist with cloud computing. Do your due diligence with the services you investigate to inquire about their security protocols, train your staff about how to use the cloud solution, and follow best practices to ensure your data is safe from unauthorized users.
How does data stay safe in the cloud?
Cloud safety is all about finding the right vendors and implementing technology that focuses on both identity verification and data encryption.
Here are 10 security questions to ask cloud computing vendors before signing up for their services:
- Who can see my information?
- Is my data located at multiple data centers in different locations so it is protected from regional attacks?
- What redundancies do you have in place to protect my data?
- What specific measures do you take to encrypt my data?
- How do you manage encryption keys?
- What happens and how will you restore my data if there is a crash or cyberattack?
- What security certifications do you have?
- Are you compliant with the most current security protocols?
- What can go wrong during implementation?
- Are you a reseller? If so, who is responsible for service and support?
Additional reporting by Sara Angeles.
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