Cloud Computing And Your Small Business

Cloud computing—obtaining computer hardware and software resources through the Internet—is touted as a great way for small businesses to improve their processes and efficiency. But is it right for your small business? Here are answers to some frequently asked questions about cloud computing.

What is cloud computing?

“Cloud computing is having the hardware and software required for your computing needs managed and provided to you by a third party, via the Internet,” explains Dean Einarson, CPA, CA,  Co-Founder of DesignDocs.Inc, a Toronto company that provides online financial and project management software to interior design professionals. “Cloud computing means you no longer download and install software programs onto your computer, you access software online. As well, your computer server and business data are no longer on your premises; they are managed remotely in data centres and accessed over the Internet.”

What are the benefits?

“Cloud computing lets your business modernize in a smarter way,” says Maria Pollieri, CPA, CA, Principal Product Specialist with Oracle Canada in Mississauga. “It permits you to standardize, automate and simplify business processes. Cloud products also tend to be user-friendly, so a new user can easily navigate through it without much training. Typically, cloud solutions are up and running quickly, are easy to integrate with your system, and allow data to be easily imported and exported.”

Cloud computing also allows you to offload your information technology (IT) management and focus on your business. “If you are on the cloud, you no longer have to install software and software updates,” says Einarson. “You don’t have to worry about managing a server and backing up your data. And if your computer hard drive dies or your laptop is lost or stolen, you won’t lose your critical data, because it’s available via the Internet.”

Through cloud computing, small businesses can access powerful software that meets their unique needs, at prices they can afford. “In the past, only large companies could hire software development firms and pay for custom software to be built,” says Einarson. “Now, software firms are finding a business niche that needs a solution, and are building that solution in exchange for subscription revenue, instead of charging a fee for a customized solution.”

Another benefit of cloud computing is that it permits secure collaboration among a variety of users. “It empowers the people who use it,” says Pollieri. “Employees, customers and suppliers can access it because it is online in the public domain.” As an example, Pollieri cites the “procure-to-pay” business process that cloud computing makes possible. “If you are a florist, you can respond to a tulip grower’s online inquiry about supplying your business, and set them up as a vendor in your system. When a customer requests tulips, the florist can reach out to the grower, place the order, have it fulfilled, get the invoice and send the payment—all through back and forth collaboration online.”

Mobility is another benefit. “You can run your business from anywhere when you are on the cloud,” says Einarson. “When you are travelling and need to work on something business-related, you can use any computer from anywhere.”

You can also use any type of device and operating system. “Cloud computing solutions run consistently on everything, from desktops and laptops to tablets and smartphones,” says Pollieri. Mobile apps can also make it easy for you to input data into your main system from anywhere.

Cloud computing can also maximize the value of your IT expenditures. “You can conserve scarce capital, because you don’t have to purchase hardware and software, you can subscribe monthly,” says Pollieri. “Cloud solutions are modular, so you can purchase what you need and expand from there. As well, you are always running the latest version of the software, so there is no need to purchase updates.”

While some business owners might question the cost effectiveness of a monthly fee, as opposed to a one-time purchase of off-the-shelf software, Einarson suggests they consider the value of what they receive through cloud computing. “The difference is that when you move to the cloud you are getting a custom solution for a reasonable cost,” he explains. “As well, technical support is usually included in the subscription fee. The value for money can be phenomenal.”

What are the drawbacks?

“With cloud computing, you don’t house your data, because it is not in your physical control and not on your premises,” says Pollieri. “Some business owners may perceive this as a risk, because ownership of finance systems still lies with the subscriber to the cloud, not the provider of the cloud.”

In some cases, you may not be able to access your raw data, meaning that system administrators can only access what the cloud computing solution reporting system allows.

“As well, your data is co-mingled with other data at the remote locations,” says Pollieri. “And if the system is going down for maintenance, you don’t control when that occurs.”

The multitude of cloud computing solutions available can also lead to confusion, adds Einarson. “There is a lot of software out there, so it can be difficult to choose what’s right for you,” he explains. “There are many partial solutions that can lead to disappointing results and turn a small business away from cloud computing.”

And while it is not an issue in most locations, cloud computing requires adequate bandwidth and a good Internet Service Provider (ISP).

Is cloud computing secure and reliable?

“Cloud computing data centres are in the business of understanding security and reliability,” says Pollieri. “These are mature systems that are likely better than you are at backing up data and recovering it in the event of a disaster. It is a misconception that because you are giving up control over your data, you are putting yourself at risk.”

Einarson agrees. “Think about how a data centre is managed, compared to your PC sitting on your desk,” he says. “Where is the business data safer?” He also suggests making sure that all flows of your data on the cloud are encrypted. And while there are always risks to being online he adds, “If you are not online, you need to protect yourself from fire, flood, theft, power outages and hardware malfunctions.”

How to get started

If you are considering moving your business to the cloud, be sure to carefully analyze your needs and do your due diligence on costs and potential suppliers.

“Ask a lot of questions and focus on whether your needs are going to be met,” suggests Einarson. “Find out how the move will affect the procedures and operations you have in place and how they may have to change.”

Don’t automatically assume the cloud will be cheaper. “I encourage people to do a cost-benefit analysis,” says Pollieri. “It’s like buying a car versus leasing one; there are pros and cons to each. For example, you can expense your cloud subscription, but you can amortize capital costs. You may have good reasons to keep your data in-house, and, if you already employ a system administrator, it may be cheaper to stick with what you have.”

Make sure your supplier is using a reliable data centre. “There are certificates and other documentation available that attest to the data centre’s security and reliability,” says Pollieri. “You should also have clear guarantees in your service level agreement, such as the supplier guaranteeing that the system will be up 99.97 percent of the time.”

Be sure to ask questions about how your data will be handled. “Find out who will own your data, what rights the supplier will have to use your data, and how the privacy of your data will be protected,” advises Einarson.

If you want to try cloud computing without placing your entire operation online, take a gradual approach. “Many business owners warm up to cloud computing slowly,” says Pollieri. “They try a suite of cloud office software first, and then move to other applications.”

Brought to you by Chartered Professional Accountants of Ontario.