It s a Brave New Virtual World. Cloud Computing 101: Brought to you by:

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1 It s a Brave New Virtual World Cloud Computing 101: Brought to you by:

2 Table of Contents Introduction What is Cloud Computing? Types of Cloud Computing Why Cloud Computing for Small Business Data Security and the Benefit of Online Backup Lower Costs, Increased Efficiency Project Management and Efficacies of Remote Business Collaborative Business and the Perks of File Sharing Conclusion Many people have heralded the digital revolution and the advent of cloud computing as the new age of virtual business. The rapid expansion of digital resources has made technology globally available to an evergrowing user audience. New technologies continually pop up, promising to increase efficiency, reduce costs and improve work effectiveness all while being faster, smarter and smaller. For small-business owners (SBOs), it can be challenging to choose from the variety of digital tools available, particularly with increased concerns of data security, privacy and ownership. One of the most convenient and easily accessible digital tools available to SBOs is cloud computing. Cloud computing offers businesses of all sizes a reliable, secure way to manage and track company affairs without the headaches of on-site servers. But, to understand the true value of cloud computing for small businesses, it is important first to debunk some of the myths about cloud computing through careful examination of its definition, processes, limits and benefits. 2

3 What is Cloud Computing? Definition As a general concept, cloud computing refers to the use of a network of remote Web-based servers, rather than a personal computer or local server to store, manage and process data. In this arena, one can work with any application or file and easily collaborate and work with colleagues no matter where everyone is, thus removing many of barriers between working in-office and remotely. The cloud has the advantages of a local server without many of its drawbacks. Like a local server, the cloud continually updates and backs itself up. Yet, unlike a local server, the cloud is accessible from anywhere at anytime on almost any Internet-enabled device, whether computer, tablet or mobile. The cloud also does not have the same manpower requirements of a local server and, as a result, can possibly reduce IT labor costs as much as 50% for some organizations. Consequently, businesses of every size and shape have embraced the globally flexible and cost-effective nature of this technology. But cloud computing has come a long way since its inception in early remote data management and filetransfer systems. Technologies such as cloud hosting now can help SBOs with every aspect of their day-to-day business through services such as , hosting, data storage, project management, virtual meeting and phone services and many others. There are many types of cloud-computing services from which to choose. SBOs, in particular, can find a variety of cost-effective and solution-oriented options more tailored to their business needs, whether in the same cloud service or through the combination of multiple providers. Indeed, cloud-technology research firm Neovise cites that more than 54% of all businesses now use cloud computing. And of this group, nearly 75% use different types of clouds or multiple services in the same cloud computing-small-business.html, May 1, % of all businesses now use cloud computing. And of this group, nearly 75% use different types of clouds or multiple services in the same cloud. 1 3

4 Types of Cloud Computing There are three main types of clouds: public, private and hybrid. Most people use one or more types of cloud computing without realizing it because of the significant degree to which cloud technology is already integrated with the technology we use every day. Private Cloud Private clouds, on the other hand, are constructed and managed entirely in a company s organizational IT system using its own servers and software. This requires a company to have its own IT team but realizes the optimal security potential and user control. A private cloud is an ideal choice for firms with the infrastructure and money to create and sustain their own data-management systems without the accompanying concerns of relying on a third-party cloud provider. Hybrid Cloud Public Cloud A public cloud is a third-party cloud service built and managed on an external platform. Cloud providers range greatly in terms of the cost and level of resources they provide. Within these external systems, users receive their own personal cloud space in a shared third-party infrastructure. This means the cloud includes a vast array of system resources, with maintenance and security within the system already covered. Public clouds are a great choice for firms and individuals who want a more flexible and affordable system without the costs and infrastructure of an on-site IT system. But the option of a third-party cloud provider brings with it obvious issues of data security and management because a company s data are being housed by an externally maintained system. A hybrid cloud involves a combination of public and private clouds, leveraging different aspects of these services to produce a more tailored system. A hybrid cloud permits a company s internal IT team to oversee a portion of data managed internally while housing other applications and data in a third-party cloud system. This allows companies the flexibility to keep ultrasensitive client data in-house but store less sensitive files and information with an external cloud vendor. According to Neovise, hybrid systems are the favored choice of larger organizations, though they are used by many types of organizations. Whether public, private or hybrid, most cloud-computing services have adaptive platforms that are accessible from any kind of device, such as a personal computer, smartphone or tablet. Gone are the days when one had to be locked in an office with a Web-enabled work computer to do budgeting or review a presentation ahead of a big meeting. Today s cloud services open up the possibilities for a more flexible, efficient and collaborative work environment. 4

5 Why Cloud Computing for Small Business Many SBOs worry that cloud computing is complicated or more appropriate for larger organizations with more internal IT capacity. However, this is no longer the case, given the rapid expansion in this technology over the past few years. Cloud computing is now appropriate for every type of organization, particularly small businesses with a variety of ever-changing needs. The data storage and security needs of a small company are often comparable to, if not greater than, that of larger firms. Most SBOs cannot afford waste. Almost all SBOs wear multiple hats, controlling the macro aspect of company management in addition to participating actively in its micro day-to-day activities. Most small businesses cannot afford the space or manpower required for in-house physical servers, but these firms still need a sustainable system to store valued company data, manage internal and external communications and control basic project management. For these reasons, many SBOs are increasingly turning to cloud computing to help manage, track and expand their businesses in a sustainable way. In fact, the use of cloud computing has really accelerated among small businesses in the past two years. According to a cloudcomputing infographic by Visual.ly, small businesses spent more than $3.5 billion on cloud technology in 2011, up from $2.2 billion in Whereas, on average, small businesses used only one type of cloud service in 2009, this is forecast to increase to seven by 2015, a reflection of the increasing number of options for small businesses in the cloud-computing market. Cloud computing has other hidden benefits for small businesses, including the possibility of saving energy costs by 90%, reducing IT labor costs by 50% and providing more complete data control than ever before. While any new system requires effective training, troubleshooting and management, the long-term outputs of cloud computing far outweigh any initial inputs of time and personnel resources. Small businesses can use cloud computing across every aspect of business: improved data security and management; better project-management tools, including streamlined accounting and finance and more efficient internal and external communications; and a more collaborative environment, including improved CRM and employee satisfaction. 2 April 2013 Small businesses spent more than $3.5 billion on cloud technology in 2011, up from $2.2 billion in

6 Data Security and the Benefit of Online Backup Despite the huge uptake of cloud computing, many businesses, small and large, remain concerned about the potential security and compliance issues of cloud technology. The very idea of externalizing data to a thirdparty or remote source brings with it a huge number of legal questions over privacy and ownership, particularly when data are shared across states and international borders. More critically, companies are understandably nervous that by placing valuable client or other company information outside the control and supervision of their own team, unauthorized users will get access to it. Many people still worry about the ability of cloud technologies to identify, authenticate and track user information in a safe and secure manner. So how can SBOs know if data are really secure on a remote cloud server? Here are a few tips from the U.S. Small Business Administration on how to make online data more secure: 3 1) Automate your backups and build in redundancy. 2) Consider server virtualization. 3) Run a full-service security suite. 4) Have a big-picture disaster-preparedness plan. The key to data security and safety in cloud computing is a system that employs data encryption and identity verification. For SBOs, this means doing research and vetting your cloud vendor to see if it has appropriate security measures, including authenticating and identifying users and devices with access to the cloud as well as encrypting sensitive data in all of its interactions with the cloud, whether being stored, removed or entered into the cloud. Small businesses using mainstream cloud providers will probably find that they have one or more of these steps already in place. But, as with any management system, it is important to have a system of checks and balances to ensure proper security. Once verified, a secure cloud space can provide a small business with almost unlimited data storage as well as a thorough and quick backup system of important company data and information. With the days of hard-copy disk backup long gone, new cloud-based backup systems provide an intuitive way to store and back up valuable information. For SBOs, this is a huge timesaver and, indeed, can be a lifesaver in the event of a power outage, natural disaster or basic document-version control problem. Think about it: Most applications now back up automatically to a machine s hard drive, but that security increases dramatically when an entire system is continually being backed up. And the fact that it can be backed up but at the same time still accessible from anywhere makes it all the more valuable January 10, 2013

7 Lower Costs, Increased Efficiency With security worries allayed, many SBOs still fret about the possible expense of any new technology such as cloud computing. While some cloud services may involve some upfront costs, the maintenance fees are usually low, with some services even free at a certain level. On the whole, small businesses generally find that cloud computing offers an easy way to expand without an increase to organizational capacity, thereby lowering operational costs and increasing productivity and efficiency. Unlike other types of technology, the barriers to entry for cloud computing are very low, as almost every type of smartphone or tablet device involves some type of cloud storage. This is critical for SBOs looking to lower operational costs, because cloud computing can grow with an organization, allowing a company to add or subtract services depending on needs, whether through adding more storage space, increased security measures or additional project-management services. This technology also offers SBOs and their employees the opportunity to function without being tied to a physical office, which is yet another cost-saver. Indeed, a poll by CDW cites that 76% of small businesses using this technology managed to lower the expense of applications and other software because the cloud does most of the work 4. Moving software to the cloud puts the support required to run most applications into the hands of the cloud provider, saving businesses expensive installation and maintenance costs. 4 February 4,

8 Project Management and Efficacies of Remote Business But cloud computing involves much more than simple data storage, backup and IT maintenance. Many cloud providers include project- and organization-management programs that can help SBOs streamline and track processes from anywhere, in addition to providing file sharing, and other collaborative communications, such as phone and videoconferencing technology. For a small business, cloud computing can provide a way to manage even the most basic operations such as project management, record keeping, accounting or even payroll through applications that can be accessed from anywhere with an Internet connection. Many cloud providers offer project-management applications with the capacity to build schedules; manage budgets; set, assign and track milestones; and store and collaborate on important documents and presentations. Add in the extra services of and remote conferencing and suddenly it becomes possible to operate a small business from almost anywhere with the right team and organization. In this way, cloud computing offers an obvious path for companies to improve CRM through more flexible communications and round-the-clock, global access. There are now many CRM applications built for cloud servers, offering businesses the flexibility to manage customer accounts in a more dynamic, trackable manner that can interact with live data, which is a big deal for any business that involves e-commerce or other timesensitive data. Many cloud providers offer project-management applications with the capacity to build schedules; manage budgets; set, assign and track milestones; and store and collaborate on important documents and presentations. 8

9 Collaborative Business and the Perks of File Sharing Conclusion The final main benefit of cloud computing for SBOs lies in the inherently collaborative nature of the technology. A cloud server not only gives a small business a place to store important company data but also a way to share and interact with others about that data all around the world. Imagine an employee in Minnesota is working on a big client presentation and needs to interact with a consulting expert in Rome. But the consultant is away from his office and has only his smartphone with him. Cloud file-sharing, conferencing and technologies in the same system allow these two individuals to share and interact on the About: same document in real time, minimizing version-control and communications issues that can often arise from working with remote teams. In this way, cloud computing gives companies, particularly small businesses, greater flexibility in managing projects and hiring top talent, allowing for the possibility to track and troubleshoot processes more quickly than ever. Cloudbased file sharing also improves productivity by making previous problems such as platform incompatibilities (e.g., PC vs. Mac, personal computer vs. tablet, etc.) a thing of the past. In all, new technologies such as cloud computing involve legitimate worries about putting valuable company information into the hands of others. Yet the recent advances in the field of cloud computing now offer small businesses a myriad of opportunities to save time, resources and money, all while keeping important data more secure. While many SBOs are still nervous about digital tools, particularly those involving data storage and information management, the reality is that cloud computing can make running a small business faster, easier and more manageable. OPEN Forum is an online community for small business owners to exchange experiences, insights, tools and tips to inspire each other to take action and succeed. On OPEN Forum you can: Share Advice Showcase your expertise and help other entrepreneurs succeed. Get Input Learn from experts and peers who have been there to make smart decisions for your business. Unite with Other Entrepreneurs Join in on conversation to discover ways to help propel your business forward. To join visit The industry leader in curated business news. Serving more than 5 million senior executives, thought leaders, and industry professionals, SmartBrief is the leading online publisher of targeted business news and information by industry. By combining technology and editorial expertise, SmartBrief filters thousands of sources daily to deliver the most relevant industry news in partnership with more than 180 trade associations, professional societies, nonprofits and corporate entities. Visit SmartBrief.com for more details. 9