Large enterprises have been leveraging the benefits of cloud computing for years. Now that the cloud is becoming commoditized and more easily accessible, small and midsize businesses (SMBs) want to realize those same returns. This guide will help you understand the cloud, how the cloud can help grow your business, and what a migration strategy might look like.
With traditional IT infrastructure, an organization’s data and processes reside in an internal network. Data is stored in one of two ways:
Applications, such as top CRM solutions, word processing or highly rated accounting software, are stored in these local servers. The business’s processes all run on this network. It’s a closed, private and proprietary loop.
Cloud computing uses the internet to open that loop so users can house data, provide processing power, and run applications on a server where they essentially rent rather than own space.
Programs live in the cloud – which is really just another giant server farm somewhere, connected to local users via services like AWS or Microsoft Azure. Organizations that use the cloud don’t have to manage their own storage and power; they can access applications from anywhere at any time and only pay for what they use.
The implications of cloud capabilities on business are significant. Gartner predicts that 85% of global enterprises using the cloud now will become cloud-only operations by 2025 because of operational advantages. Gartner also forecasted that worldwide public cloud end-user spending would reach nearly $6.8 billion by the end of 2022, up from 2021’s spend of $4.8 billion.
And according to Flexera’s State of the Cloud report, 53% of SMBs spent more than $1.2 million on public cloud services, with 22% spending up to $600,000.
Organizations with deep pockets have enjoyed cloud computing’s advantages for years, and they’re now becoming accessible to SMBs.
Some of the best POS systems are cloud-based and demonstrate how cloud services can be a convenience game-changer for SMBs. Cloud-based POS systems let you access back-office features from any browser, so you can view your store’s sales performance and run POS reports wherever you are.
Business owners can immediately get up to speed on sales, inventory and other data without interrupting workflows or even stepping inside the store.
Web hosting is critically important to businesses that sell online, and cloud hosting is a scalable option ideal for SMBs. Read our guide about the top web and cloud hosting services for advice on features and pricing structures.
Generally speaking, there are three layers of cloud applications: infrastructure as a service (IaaS), platform as a service (PaaS) and software as a service (SaaS). Some consider business process outsourcing (BPO) to be a fourth layer. When people talk about moving up the stack, they’re referring to these elements.
Here’s a brief overview of cloud service types.
When BPO is considered a layer of cloud application, it is said to be at the top of the stack. It’s crucial to understand that BPO is not technology; it’s a business model. In this layer, processes are outsourced to vendors. This layer is often used for procurement and accounting tasks.
BPOs come in either a horizontal offering that leverages data across specific industries, or a vertical-specific offering that requires unique industry knowledge. Paychex and QuickBooks are well-known BPO applications. To learn more, read our review of Paychex cloud-based payroll software and our QuickBooks Online review.
The next layer of the stack is SaaS. Similar to traditional, on-premise software, cloud-based applications run on servers. However, these servers are in the cloud and accessible via the public network by anyone with a subscription.
SaaS applications are set-and-forget applications that companies don’t have to worry about managing. Businesses can typically use them in a pay-as-you-go model instead of paying an upfront cost. Salesforce, Office 365 and Dropbox are all examples of commonly used SaaS applications. Read our Salesforce CRM review to learn more about this cloud-based SaaS solution.
Moving down the stack, we come to PaaS. Broadly, this is where software applications are built and deployed. If you’re buying a PaaS offering, you’re paying a provider to deal with most of the servers, operating systems and network infrastructure so you can focus on developing the actual business application. Heroku and Google Apps are examples of PaaS providers.
IaaS is the bottom and most foundational layer of the stack. This is where the most fundamental computing elements reside, such as servers, storage, hardware and networking. Organizations that want to develop an entire application themselves look to IaaS providers for these elements, along with the security and ongoing maintenance they require.
There is an IaaS provider for just about every use case out there. Navisite, SoftLayer and Vyper VPN are some of the more popular offerings.
Cloud computing’s pay-as-you-go nature is transformative, and the cloud can help businesses increase productivity and profits. But while the cloud is a game-changer, cloud migration has its challenges. Moving operations to the cloud requires research, planning and a comprehensive change in management strategy.
The benefits can be significant and immediate, but if you execute cloud migration poorly, the disadvantages can cause damage. Here’s an overview of the cloud’s pros and cons.
A cloud migration might save your company money, but it isn’t always the least expensive option.
Here’s the upside of migrating to the cloud:
Read on for the downsides:
The key is to research your options and weigh them against your budget. After all, what’s right for one SMB may be a poor fit for your business and vice versa.
The cloud affords SMBs unparalleled agility, but SMBs must understand that this agility may come with security concerns.
Here are the advantages:
Here are the downsides:
If you decide your SMB will benefit from cloud services, it’s time to create an implementation plan with distinct steps. If you start down the cloud road without clearly understanding your existing infrastructure costs and anticipated future needs, you may wind up costing yourself more than the cloud can save you.
Follow this five-step process in your cloud migration:
If you’re beginning your cloud migration with cloud-based backups, check out our guide about the best cloud storage and online backup services and evaluate features like price, storage space, security and scalability.
The expensive hardware and software necessary to run sophisticated business applications are now within reach for SMBs. This is the true beauty of cloud computing: It helps even the playing field. With research, deliberation and a little faith, SMB owners can implement enterprise-grade solutions to better their own businesses.
Kimberlee Leonard contributed to the reporting and writing in this article