Cloud Computing and Software-as-a-Service

Cloud computing is all the rage these days, being generally described as a computing model in which services and storage are provided online When small business owners or new software companies refer to cloud computing, they most often mean an application that runs on the Internet; as opposed to operating from a desktop that is connected to the Internet—Software as a Service (SaaS). 

Everything from phone services to marketing operations has a cloud based solution. Oftentimes, you are using SaaS without even realizing it. For example, your email provider is likely delivering service from the cloud, without on-premise hardware and software.

The following is a guide of different factors to consider when deciding to adopt a cloud solution for your business.

The growth of cloud computing is astonishing.
The worldwide cloud computing market is estimated at $8 billion, with the U.S. market accounting for $3.2 billion of that sum, or 40%. Gartner’s 2011 predictions place Cloud Computing at the top of their list of Top Strategic Technologies. Additionally, Gartner predicts that the SaaS market will reach $14 billion in 2013.

Says Gartner, “Cloud computing services exist along a spectrum from open public to closed private. The next three years will see the delivery of a range of cloud service approaches that fall between these two extremes. Vendors will offers packaged private cloud implementations that deliver the vendor’s public cloud service technologies (software and/or hardware) and methodologies (i.e., best practices to build and run the service) in a form that can be implemented inside the consumer’s enterprise. Many will also offer management services to remotely manage the cloud service implementation.”

A recent study conducted by AMI-Partners revealed: “Small and medium business (SMB) spending in the U.S. on software-as-service (SaaS) will increase exponentially over the next five years, eclipsing growth in investments in on-premise software by a significant margin. AMI forecasts growth in investments in on-premise software by a significant margin. AMI forecasts a 25% CAGR in hosted business application services spending through 2014. This will come against a modest 5% uptick for all other categories of on-premise software combined. However, this growth will not be uniformly spread across all hosted applications. Mature applications such as ERP, SCM, procurement, finance, and core HR will turn over more slowly than those that are less saturated and have lower switching costs.”

Cloud computing software solutions vs. desktop applications.
Small businesses choose cloud computing solutions over desktop applications because it is less expensive. You pay a small monthly amount rather than a one-time fee, like with traditional desktop software.

Another reason small businesses choose cloud computing solutions is that the SaaS application is often a simplified version of what you are currently using, which is installed on your machine. The developers of many cloud computing apps have created just the basics required to get the job done.

One of the market leaders in the cloud computing industry, Salesforce.com, has over 52,000 customers in 2009 while hosting provider Rackspace has over 1,000 SaaS apps in its new AppMatcher.com service.

Cloud computing solutions are available whenever you want, wherever you are.
The application often needs to be accessible from a web browser for many small business users operating virtual offices or operating remotely on different machines depending on location. Cloud computing is available wherever you have access to a computer and browser, and that is one of its biggest advantages.

If you aren’t connected and operating your laptop offline, many apps have either a mobile app or a widget that you can download to run a lighter version of the software. Some Google Apps, for example, offer a desktop version called Google Gears, which will sync your data when you’re back online. Google Apps has over two million businesses and 25 million users in its cloud computing marketplace.

Simple, focused cloud computing solutions can often get the job done.
If you don’t use all of the features of your desktop, a cloud computing application might offer a “forever free” plan, which will allow you to do the same work as a desktop application, but limited in some way. A billing solution might let you run an unlimited number of voices, for example, but only for two separate clients.

With that said, all apps that live in the cloud are not more basic than their desktop equivalents, but rather they offer a paired down basic package that can help you complete the task at hand when you don’t require the feature-risk version. Zoho, for example, offers a simple bookkeeping app that is free. You can also integrate it with other financial SaaS apps to do more, or purchase the more feature-rich SaaS version.

Pay attention to the security of your data.
It is important to remember that you are still responsible for making sure data is where it needs to be—onsite or in a cloud. Your cloud computing vendor isn’t responsible for your data, security or data privacy. They may promise certain aspects of security, but your are responsible if regulators come calling if you are a financial institution, for example. It is important to make sure you aren’t violating any compliance concerns and that your data is safe.

A May 2010 ‘USA Today’ article told the story of a small business owner whose store was robbed. Eight desktops were stolen. They purchased eight new computers and were back in business in no time thanks to cloud services, like Salesforce.com, Microsoft Office 365 and QuickBooks Online.

Choose a stable and reliable cloud computing vendor.
It is important to ask questions like, What type of Service Level Agreement (SLA) do they have? How long have they been in business? Can you talk to users directly? How many customers do they have? It is often possible to read testimonials and get good information, and if the testimonials are real, they will often link to the person who made the comment. You can also do a search on Twitter, Facebook or LinkedIn.

Consider the uptime of your cloud computing applications.
Uptime refers to the time a hosted application’s performance record and most are in the range of 98-99.9%–which acknowledges that servers go down for maintenance or unexpected issues. Make sure to read SLAs carefully and talk about changing terms with the vendor if you have to.

Pay attention to customer support.
Be sure to check if there is an extra charge for support and maintenance or if it is included in your monthly subscription fee. While it is often included, it important to read the fine print to check and also to see if you have access to a customer support team via phone, email or social media.

Choose a flexible cloud computing vendor.
Your monthly frees are usually dependent on how many users you have and you can add and subtract users as needed. Your capital outlay to “purchase” cloud based apps is often lower than traditional on-premise or desktop apps. Cloud computing is one streamlined way to scale with your needs.

Evaluate your requirement for software upgrades.
Cloud computing apps are regularly improved and upgraded, and you benefit from each and every improvement without additional direct cost and without the effort and time of downloading and configuring upgrades. Enhancements often happen more quickly and in shorter development cycles, often based on customer requests.

Make sure your cloud solutions integrate well.
Cloud computing might just be for you if your need involves some type of integration, as many of the current cloud based apps offer an API (application programming interface) which other synergistic apps will leverage. You might find an accounting package, for example, that ties into a CRM package. You would have to pay someone to customize both apps for you if you wanted to do this with your current desktop application. A web-based app would save you time and money and might have already done it for you.

You can look into an offering like CastIron (recently acquired by IBM) if integration is your concern, as it “pre-configures a number of apps” so that you can connect to the solutions you are using already.

Cloud computing offers a distinct advantage if rapid deployment is integral to your project, as many cloud computing projects are up and running in hours—sometimes in minutes. Although you may not get every feature set configured to your need, you can start working right our of the gate oftentimes. If the provider you evaluate has an API connected to another application you need, it may offer advantages over a desktop application—which will require more money to customize later.

Cloud computing isn’t always the least exciting solution.
Cloud computing may be the perfect option if cash-flow is an issue. While on-premise software purchases often involve high upfront licensing costs, cloud computing apps often require no large up-front licensing fees requiring department or board approval. There are usually no annual maintenance fees either.

On a website pricing page, SaaS pricing is often clear, and if a cloud computing app vendor requires a demo or doesn’t reveal its pricing, it usually means that there is a more complicated solution that demands some installation process or customization that will cost more upfront.

Pay attention to how quickly your software needs to change.
User are often forced to choose between a.) Upgrading at a high cost and experiencing delays as the new features are evaluated and plans for adoption are formulated, and hire or enlist local IT talent to develop, test, debug, deploy and train personnel on the new application, or b.) Continue using the older version of the software and avoid advantages of an upgraded version when an application packages requires an upgrade.

You are left waiting for software changes to be made by the software company in both cases, but with the cloud computing model, you will see those upgrades sooner than with a desktop application. The vendor applies upgrades at the data center and the upgrades are made available to users immediately via online connection and there are only minor delays—they also come at no cost to the user.

Remember: your monthly fee covers the upgrades so make sure to compare this when you need to consider this. If you upgrade each year, than the monthly outlay may be lower from a total cost perspective over time, while with a desktop application you are waiting until the next—often annual—release.

Many goals can be accomplished without all of the bells and whistles.
Because they are often focused on a particular area or business niche, cloud based applications can be less robust. While it can be argued that you have to operate your business—from a software perspective—using the Pareto Principle in which 80% of the effects come from 20% of the solution, this isn’t entirely accurate because most desktop users routinely admit that they don’t use all of the features of a desktop application. This partly explains how many cloud based applications get developed—they look at core problems rather than a large feature set that most users won’t even try.

If the cloud computing application lacks some of the features you need, you can add features via customization or premium levels of vendor service. Each application provider is different, but most offer extensive interface capability, usually via Web services that integrate both internal and hosted systems.

A common myth is that cloud computing software doesn’t play well with legacy applications/data sources, but there are two primary methods of integrating cloud computing apps: batch synchronization (which initially involved exporting/importing your data into a cloud based applications, after which your data can be incrementally synchronized on a scheduled basis) and real-time integration via Web services (which is like a neural middle layer where your application talks to the cloud computing company).

It is important to note that you have to evaluate the implications and limitations of cloud computing software for your needs. Some gaps remain for complex end-to-end processes that require complicated workflows or business processes.

Engage your technical team.
It is important to keep lead technical people in the loop for security and integration issues for a number of reasons. If you are a business owner and are unsure about what information you are sharing, you could be sending information out that onsite applications need or you could even be putting corporate information at risk.

Applications and services are now easily accessible to end-users, who can acquire SaaS capabilities without input from their IT or data management teams, which is a major challenge with cloud computing. Other related issues like data replication, outages and the complications of outsourced data storage can complicate cloud integrations. And if your tech team isn’t aware that your are running certain cloud based apps, you could create  challenge in multiple functional areas.

Good cloud computing companies have built their web apps on a Web-services based architecture because it is less proprietary and easier for these apps to share data with one another. These standards make it easier for companies to integrate services, but they can inadvertently create security problems by making a hacker’s job easy if the proper security isn’t in place.

Internal training is still required.
Most SaaS vendors provide online video tutorials in addition to robust user communities and forums where you can get your questions answered. This makes cloud applications easier to use with less training involved. Direct access to these teams means less of a burden on your own internal technical teams.

Conclusion
Cloud computing is drastically shaping the current small business market and if you are trying to grow your business and are limited by cash flow, cloud computing is an attractive option. The addition of Smartphones and other mobile technologies—aka mobile computing—makes for a dwindling audience for on-premise applications. The previously listed 16 things to consider before choosing cloud computing solutions will help give you a new outlook on how to get work done and solve problems.

For more information on how cloud computing can help your small business contact a Nubifer representative today.