We all know that the IT industry just loves making up buzzwords that sometimes serve to confuse us non-techo types. So what exactly is this “cloud” technology or “cloud computing”, and what do we need to know about it?
“Cloud” simply refers to computing resources that are delivered as a service typically over the internet, rather than physically residing on your local computer hardware setup. The essence of cloud computing is that providers maintain their computing resources in an IT environment that they take responsibility for. They then allow web access to this environment for their customers. So anyone who has a functioning web browser can use cloud software almost instantly. They take care of all the hassles for you, as well as providing most of the computing power.
The "old days" of computer technology
Remember when you used to purchase a computer at the store and then faced the prospect of getting all your software tools loaded and working? The process usually involved deciding what software you needed, going to the store to buy the software on a CD, then going home to try and install the software yourself (and crossing your fingers that it would work!!)
Sometimes it would work, but often it wouldn’t. This could be because of hardware issues, the software not being compatible with other software or problems with version upgrades. Often at that point you would make multiple calls to the various software and hardware providers, who would proceed to blame each other while your new shiny PC remained next to useless on your desk.
The next step would be to enlist professional support to get your new tools to work for you. The need for professional help multiplied for small business, because the issue of multiple users involved “complicated” network systems designed to allow all users to share the same systems and information.
Another consideration would have been things like data backup and security before you and your business was ready to go. Once everything was in place you were set … until … the next software upgrade which would commonly bring another bunch of hassles for you and your business.
Today
They were the “old” days. If we take the really simple example of a small start-up company you can really see the benefits of “cloud” in comparison to our “old days” example. Picture this:
On day 1 of your new business you arrange an internet connection and buy a laptop, PC, or even just a tablet. You then subscribe online to the software services you need and you can start using the software straight away. For example standard Microsoft products such as Word, Excel, Outlook, PowerPoint and SharePoint are all available as “cloud” applications. Increasingly, accounting software is also going this way. By the afternoon it’s all working and you are up and running! No installation hassles – it all just works from your web browser! All you did was subscribe to those services!
And as your business grows, unlike the “old days”, the use of software doesn’t become more complicated. Your first, second and fiftieth employee will have the same setup experience as you did and your business data is already shareable. Just add another user to the subscription. Also, as the provider is in control of the software they look after all upgrades without you needing to lift a finger!
Sounds great don’t you think? Convinced? Well we are. You can’t ignore this trend. We have run cloud based operational software for several years and it’s been a terrific success. We make zero support calls per year. That’s the way it should be.
Benefits summary
> Reduced set up/installation time – it just works.
> Scalability – grows with you.
> Zero maintenance time and you are always on the latest version.
> Less hardware dependant.
> Less “support” dependant.
> Reduced capital costs and financing hassles – pay as you use.
> Sharable and accessible from almost anywhere.
> No “versioning” data issues – one single source of truth – live and real time.
> Outsourcing data backup and security issues.
> Your disaster recovery plan is already mostly completed.
> Potential overall cost savings.
> Collaboration with advisers (such as accountants and financial planners!) can be based on online and real time data.
Sounds too good to be true?
As with all these things it really depends on your particular situation, nothing replaces professional advice and pre purchase due diligence. Simple small businesses like the one in the above example tend to grow into bigger, more complicated businesses that may be better served by a mix between cloud and non-cloud set ups. Various types of “cloud” have now emerged to cater to such different needs, with the usual associated buzzwords like “private cloud”, public cloud, software as a service, infrastructure as a service, hybrid cloud … the list goes on.
The main considerations you need to consider in your due diligence process before considering investing in cloud technology are:
> Do you have reliable internet connectivity? Speed issues?
> Where is your data? Are there “sovereign risk” or legal issues?
> What if the provider decides to, or is unable to provide you with your data?
> Are the provider’s data protection procedures sufficient for your needs?
> Will the provider be around in the years to come and what happens if they aren’t?
> Are you comfortable with longer term dependence on third parties hosting your data?
Conclusion
We trust that the above has helped your understanding of one of the biggest current developments in information technology. It’s almost inevitable that your business will move at least partly into the cloud in the coming years, if you aren’t there already. Have an open mind about how technology could progress your business. Keep your technology plan high up on your strategic agenda so that it’s regularly addressed both internally and with your advisers and peer networks.
Would you like more information? Contact or your Altus Adviser.