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Updated May 20, 2024

8 Ways Cloud Computing Can Increase Productivity and Profits

Explore how cloud computing offers scalable resources, enhanced efficiency and cost savings to transform the way businesses operate and grow.

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Sean Peek, Senior Analyst & Expert on Business Ownership
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As a business owner, you always need to use the most effective methods of computing to keep your business as efficient and profitable as possible. Cloud computing, in particular, can have tremendous benefits for your company’s earnings and operations. Learn what exactly cloud computing is as well as the benefits and costs. 

What is cloud computing?

Cloud computing is the on-demand delivery of IT resources over the internet with pay-as-you-go pricing. You can access technology services on an as-needed basis from a cloud provider. Organizations of all sizes and industries can use cloud computing for processes like data backup, email, virtual desktops, software development and testing, big data analytics and customer-facing web applications.

“Cloud computing” as a term has been around since the early 2000s, though the concept of computing services dates back to the 1960s. Between the ’70s and ’90s, there were many advancements in computing technology that led to the creation of cloud computing. The ’90s, in particular, saw companies providing virtual private networks (VPNs), a precursor to today’s cloud computing. Some examples of companies offering cloud computing services include Salesforce, AWS, DigitalOcean, Dropbox, Civis Analytics, Carbonite and Forcepoint. See our top picks for cloud storage services and online backup providers.

Types of cloud computing

There are three different types of cloud computing: the private cloud, the public cloud and the hybrid cloud. These refer to where the infrastructure is located and who has access to it.

On a private cloud, a private IT network is used to disseminate computing services for a single organization. The private cloud is hosted internally and protected by company firewalls, thereby offering a higher level of security because it is not accessible to those outside the organization. With a public cloud, computing services are available to anyone. Third-party providers offer the services over the internet for free or for users to purchase on-demand.

Lastly, a hybrid cloud offers the “best of both worlds,” as it can shift from a private cloud to a public one when a business’ infrastructure scales. With the hybrid cloud, businesses won’t purchase and maintain the resources of the general public cloud computing; they will only pay for the resources they temporarily use. [Read related article: A Small Business’s Guide to the Different Types of Cloud Services]

Did You Know?Did you know
Many platforms, like Salesforce’s CRM, rely on cloud computing to keep data accessible and secure. Read our Salesforce CRM review for more information.

What are the benefits of cloud computing?

As a small business owner, you’ll find many benefits to cloud computing. Among them, using the cloud can help grow your business. Here are some other advantages.

1. Team collaboration

Cloud-powered productivity sites and suites allow multiple colleagues to work on projects simultaneously, which in turn promotes collaboration within a team both in and out of a physical workplace. Some examples of such services are Google Workspace and Microsoft Office 365.

Cloud computing also allows for quick and easy sharing of information between co-workers. This helps maintain consistency among employees as they work together on projects, even if they’re working from different locations or time zones. This ability is more important than ever in the age of working remotely.

2. Safety and security

The reluctance of many companies to move over to the cloud lies in a misconception that keeping IT operations under tight control in-house is a safer solution than relying on cloud computing. However, while moving operations to the cloud does mean giving up some technological control, often a third-party firm can look after your data more securely than you could.

Solid cloud providers like Oracle have robust security protocols in place and can clearly outline their methodologies to ensure you have complete confidence in allowing them to manage your data. Our Oracle NetSuite accounting software review demonstrates just one way the company’s cloud-based apps can aid your business.

3. Economics

The overarching goal of any business is to make a profit, and cutting operational costs wherever possible can make that goal more attainable. The most significant benefit of moving to the cloud is unsurprisingly a financial one. The financial model associated with the cloud is predictable and economical. There are no upfront costs, you can choose to pay flat-rate monthly fees per user and/or pay based on the amount of bandwidth used, and there is easy scalability in either direction. Furthermore, switching over from legacy servers to cloud servers eliminates the need for continual server environment refreshes, reduces demand for IT support staff and saves on energy use. This all translates to more money in your business purse.

4. Sustainability

Cloud computing is widely considered a sustainable option for companies. It not only cuts down your paper usage, but also contributes to energy efficiency. Traditional data hardware systems require uninterrupted power supplies and cooling, which take up a great deal of electrical power. Using the cloud means you don’t have to factor in climate control costs for your technology hardware. Cloud-powered companies that allow their workforces to access their programs and data anywhere and at any time also have reduced commuter-related carbon emissions. Additionally, cloud providers also use less carbon-intensive power mixes, which are more energy-efficient.

FYIDid you know
Environmental issues in the workplace are a growing concern for employees. Workers want to know that their office is a healthy place to be and that the company they work for isn’t harming the environment. Making the switch to cloud computing is one of the ways your business can make a profit while being socially responsible.

5. Flexibility, functionality and efficiency

In the ever-changing business landscape, it can be interesting to witness how some companies adapt — often many years too late. While some operations and market changes are harder to adjust than others, it is important to stay as nimble as possible. Cloud computing allows you to adapt to market conditions with a certain flexibility that is not available when you use on-site, physical solutions. 

Aside from adapting to external conditions, this virtual solution also enables quick responses to internal demands. If user demand increases, cloud services can be increased to meet it and then be easily decreased as demand drops. This eliminates the problem of over-provisioning or IT systems overload. In other words, cloud computing allows your company to be flexible, alter functionality and adjust efficiency as circumstances change.

6. Disaster resistance

Losing important data to a fire or some other disaster at your business premises can devastate your company. Data backup service providers have preached this message for a long time, but with the availability of cloud services, it is now much more convenient to heed the warning.

Oracle, mentioned earlier, is one of the leading providers of data services, and its focus on innovation and security means cloud storage is being made ever more disaster-resistant. Virtualization technologies enable the incorporation of cloud-based recovery models, which keep a cloned version of all your data readily available at data centers should something happen due to a natural disaster.

TipBottom line
Create a comprehensive disaster preparedness plan for your small business to withstand anything Mother Nature throws at you, be it a hurricane or pandemic.

7. Business competitiveness

The main reason companies that invest in big data, security, cloud and mobility gain a competitive advantage is cloud-based services enable them to seize opportunities faster than competitors. The cloud allows businesses to develop a speed and agility that directly affects their ability to develop products and respond to customer needs in a timely manner. Think of the cloud as a facilitator that helps businesses bring products to market faster. It means that small companies can effectively compete with larger ones.

8. Big data management

Last but certainly not least, cloud computing makes it easier for small businesses to handle big data. Traditional data storage methods haven’t always provided a simple way for companies to carry out advanced analyses of their databases. In the case of large firms, this process can take many weeks and require highly knowledgeable specialists. The cloud provides the necessary tools to sort through lots of unstructured data quickly and easily. This is yet another area where cloud computing positively affects productivity and profits. Furthermore, the cloud has additional security layers to protect your business’s data. [Read related article: Using Data Encryption in the Cloud]

What are the drawbacks of cloud computing?

Although cloud computing can be beneficial for businesses, it can also pose challenges. Here are four disadvantages of cloud computing to consider.

1. Internet reliance

Since cloud computing services are received directly from the internet, your business could experience downtime if your internet connection is interrupted. Weak internet connection, in addition to full-blown outages, can halt operations — costing you valuable time and money.

2. Data vulnerability

Unless your business can afford a private cloud, your data could be at risk if stored in the cloud. With both public and hybrid cloud options, cloud providers have access to your proprietary data. The idea of cloud computing as a shared space means you could be sharing sensitive data like operation systems and security protocols with your competitors.

3. Can be costly

There are no upfront costs associated with cloud computing since businesses don’t need an in-house IT infrastructure. However, that doesn’t mean cloud operations will necessarily be low-cost. Think of cloud computing as a storage space you pay for each time you use it, i.e., more access leads to higher costs. Additionally, businesses should factor in costs to migrate application data from in-house servers to the cloud. Although this migration may not be necessary for newer applications, many older ones were not created with the cloud in mind.

4. Lack of autonomy

If you need to control all facets of your business, cloud computing may not be for you. With public, private and hybrid cloud models, the service provider is 100 percent responsible for operations. This includes maintenance, monitoring, support and availability of your chosen cloud model. The lack of control for businesses may cause additional worries about data access and management.

What are the costs of cloud computing?

The cost of cloud computing depends on the provider you choose and the specific services you need. You’ll have to determine which cloud type best suits your business, how much data you will be saving and your reasoning for switching to the cloud. Your answers will guide you toward a specific solution. However, generally speaking, the budget for cloud computing is typically $5 to $25 per user every month; the usual flat rate is $2 to $50 per month. There are online calculators provided by cloud computing vendors that you can use to figure out how much they may cost for your company. 

Besides paying for the technology itself, there are additional cloud computing costs to consider, such as data transfer fees, data retrievals and egress, static resource management habits, over-provisioning, and workload and resource mismatches. To achieve the cost savings associated with cloud computing, it is important to understand how the associated costs work, what influences them and what to avoid.

We also recommend weighing the benefits and expenses of each cloud vendor. See our comparison of Azure and AWS as an example.

author image
Sean Peek, Senior Analyst & Expert on Business Ownership
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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