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SMBs: What to do about cloud computing?

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With all the hype these days around “the cloud” it’s hard not to be a bit skeptical.   Didn’t we see this same kind of buzz in the early days of the Internet and didn’t it take a lot longer to hit Main Street than anyone promoting “the future is the web” predicted?   Perhaps there is reason to be more optimistic this time. In my view now’s a good time for small businesses to think through what opportunities the cloud represents and what it can do for your business.

Though the cloud may seem complex, there’s a great deal of innovation that’s happening around it, all designed to make it more tangible for businesses of all sizes. In fact, much of that innovation can have a profound impact on critical parts of your business. It may also play a key role in helping you scale and grow your business.   Having personally experienced several transformative IT waves over the last 20+ years – client-server computing, dot-com/e-business, and VoIP –there is ample evidence that we are on the verge of a tipping point with cloud business applications.

Here are a just a few reasons to believe the movement to cloud computing might be worth your attention

1) Large investments are being made by major IT vendors

At Dell we announced in April that we’re building multiple highly efficient data centers around the world to provide our customers access to public and private cloud technologies enabling them to take advantage of Infrastructure and Virtual Desktop-as-a-Service offerings as well as IT outsourcing. Our peers are making investments of their own – according to CNET, Microsoft alone is “reported to be spending hundreds of millions of dollars to convince businesses what it (the cloud) really means”, spending 90% of its R&D budget or $8.6 billion on the cloud. Not to be outdone, both Amazon and Google, continue to allocate a large portion of their quarterly $200-$400 million capex budgets on the cloud.

2) Cloud computing / SaaS vendors are hitting major milestones

Saleforce.com announced record results in fiscal year 2011 achieving over $1.5 billion in revenue and expects to surpass $2 billion in FY 2012. Not coincidentally Salesforce.com’s stock price hit an all-time high of $153 per share, more than double its pre-recession share price. In addition, 74 percent of respondents to a recent survey of 119 software company CEOs by Sandhill.com, a leading software industry media company, indicate that cloud projects are driving current investment.

3) Top tier analysts are making bold predictions

Gartner Group’s 2011 CIO Agenda survey of over 2,000 CIOs lists cloud computing as the number one priority for CIOs. It also indicates that while overall IT spending remains flat, investments in SaaS will increase from 3 to 43 percent in the next four years. Forrester Research predicts the market for cloud computing will grow from $25.5 billion in 2011 to $159 billion in 2020, with SaaS being the primary driving force making up $133 billion in that same timeframe.

A December 2011 survey of 1,000 North American mid-market and small businesses by MarketBridge indicates 44 percent of companies claim to have at least one business application on the cloud and more than 70 percent indicate they will move more within the next 12 months. Another recent study from SMB market research firm AMI Partners indicates SaaS adoption by SMBs will grow 25 percent over the next five years.

So what do you do if you are a small or mid-market company trying to make sense of the cloud?   You might not want to get left behind but you certainly want to do your homework before jumping in. Here are some thoughts to lead you in the right direction:

  • Define why the cloud makes sense for your business

The fact is, like most items, there is no special formula for moving to the cloud. Ask yourself, does moving to the cloud make sense for you? Does it map well to your business processes? Does it give you a competitive advantage you don’t already have? Are your industry peers moving to the cloud and is it working for them? It’s important to define these items to ensure you’re using a solution that’s customized to your needs.

  • Understand how cloud is different

There are quite a few differences between cloud and on-premise computing. Just because the cloud sounds easier, doesn’t mean that it is. Think about which applications you need to run in your own data center and why before you move some to the cloud. Have a good sense of where you want your data stored and factor in security as well as economics.

  • Determine where to begin

Like anything else, you can’t do it all at once. Take a hard look at your existing IT solutions and areas where things are no longer working or areas you may have simply outgrown. Are those good candidates for the cloud?

  • Find the right partner

Moving to the cloud might not be as easy as you would think. Find the right partner who can help you along the way. Will they help you build the right solution not just sell you a standard product? How they can support you over time.

We will dig into each of these areas in future blogs and explore how to make the most from this tipping point for business software in the cloud. Of course, feel free to weigh in with your own thoughts along the way.

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