Business Blog No 23 – The Cloud

Cloud computing is not new. We have all used eBay, Google, Facebook, Gmail etc. which are all cloud based. The problem is that the word ‘cloud’ is a misnomer and perhaps makes us feel that our data is in ‘outer-space’ somewhere. All cloud hosting companies actually run huge physical servers in big data centres across the globe to store the data.

Just like plugging into a grid to get access to what a company or individual wants and needs, ‘cloud’ is a subscription based pay as you go service where you don’t own the infrastructure or software but rather subscribe to access it. There are various versions of the ‘cloud’ including Software as a Service (SaaS), which means using cloud based software solutions, and Data Protection as a Service (DPaaS) which means replicating and backing up data to the cloud or to a third party disaster recovery provider.

Being in the ‘cloud’ does have many ‘silver linings’ such as allowing flexibility and giving you access to the latest technology from anywhere there is an internet connection. A start-up can also access the same technology as a big corporate. A key advantage of moving to the cloud is the cost savings from no longer needing to purchase hardware infrastructure and software licenses; instead you pay a regular monthly subscription fee. This also converts a capital cost to a deductible expense. Going to the cloud can also facilitate efficiency improvements and cost savings freeing up resources. It also enables easy sharing of data and financials and is a real time one view of the truth.

There are risks of going to the cloud and these include the risk of data loss, security risks and access issues being out of your control. So good data security and backup procedures remain key. It is however argued that cyber security risks are actually reduced by sitting in the cloud as the companies that provide cloud services invest more money in security than individual companies would and they have specialists managing the cyber-security matters. Privacy Laws may come also into play. A solution to this is for customers’ personal data not to be stored in the cloud, allowing only business process tools to sit in the cloud.

A key step before moving to the cloud is to firstly assess what the real business requirements are and what are the objectives of your IT needs and your IT budget itself.

Look for a cloud service provider who has achieved the internationally recognised ASAE 3402 certification and that sound SLA’s (Service Level Agreements) are in place with these providers and that issues of locking-in and transferability are covered. Naturally get some customer references to validate the providers claims.

It might mean dipping your toe in the water with things such as Microsoft Office 365, Cloud-based Antivirus software, payroll systems or accounting software eg MYOB. A staged approach of moving to the cloud and ensuring adequate training for staff ensures your business won’t be overwhelmed by taking on too much at once.

From our survey earlier in the year, a surprising result was the apparent slow uptake of cloud based IT solutions. For the vast majority of the survey respondents, IT systems are still kept in-house.

From my perspective, cloud solutions are the future and are great productivity and cost saving opportunities. Converting your in-house software platforms (and the associated reduction in necessary infrastructure costs and maintenance) to a cloud based solution by a subscription model is recommended. Beware of IT support providers who advise clients to avoid going to the cloud due to their own self interests. To take the mystery out of cloud computing, just remember all our personal emails have always sat on a server somewhere in the “cloud” until we retrieved them and that hasn’t seemed to have bothered us…

Ross – Virtual/Part-Time CFO

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