26/07/2010

By James Hodgkinson

The benefits of cloud-based web solutions are numerous, particularly when used in conjunction with an effective business strategy. James Hodgkinson, managing director of complete SMB web solutions provider, vli, explains why internet-based technologies present a more flexible and cost-effective means of showcasing smaller organisations to a wider audience.

For many SMBs, cost is often the primary barrier to investments in new technology. Yet by delaying the implementation of technology in favour of more immediate challenges, smaller organisations run the risk of becoming outclassed by more technologically proactive competitors.

As well as the view that their businesses are not large enough to invest significant funds in IT improvements, many SMBs are concerned that the time and challenges associated with implementing modern technology are too onerous to tackle when they need to focus on day-to-day business matters.

Additionally, at board level, directors are not always aware of the scope of the technologies that are available. There is also the assumption that investment in technology means the need for additional infrastructure, cabling, server racks, PCs and laptops, not to mention the expensive software licenses that must be regularly updated and the cost of supporting and maintaining the technology.

One of the biggest challenges facing an SMB is determining the proportion of turnover to allocate. Most corporates invest around 3-5% of their turnover in technology compared to current SMB investment levels of less than 2%. The reason that larger corporate organisations are typically faster to invest in new technology than their smaller competitors is because most have IT teams with the capacity and remit to keep track of new technology, understand it, and assess how it can best help their organisation.

Yet in addition to having a larger budget and more resources than smaller businesses, most board-level directors also understand that even a large financial outlay in new technology is far more likely than any other area of investment to have a major positive effect and achieve a healthy return on investment.

Now, by utilising the cost-efficient cloud-based model, software providers are in a position to provide fully integrated web solutions that are individually tailored to business needs and deliver functionality to the SMB market that was previously only available to enterprise organisations.

Why cloud-based solutions?

There has been a lot of hype about ‘being in the cloud over recent years, but it is not always clear as to how cloud-based solutions work and how they might be of value to small and mid-sized businesses. In its simplest terms, cloud computing is the provision of demand-driven software, web solutions, services, applications, information and data storage, all of which can be accessed directly and securely by users over the internet through a simple web browser, instead of being provided via a server or PC.

In general, customers that adopt cloud-based solutions do not own the physical infrastructure that hosts the software being provided over the cloud. Instead, they avoid capital expenditure by renting usage from a third party provider, usually paying only for the resources that they need.

The majority of cloud computing infrastructures consist of services delivered reliably through data centres, giving users access to services from almost anywhere that has access to an internet connection. Cloud services are increasingly becoming single points of access for all user needs within an organisation, with customer quality of service requirements being underwritten by robust Service Level Agreements (SLAs) over a given contract period.

The key advantage of cloud-based web solutions is that they are contained in a secure, hosted environment which means that businesses need take no responsibility for the hardware or software related to the solution. Our own business has been in the cloud for more than ten years, in which time it is fair to say that we have found the industry hype to be a bit of a marketing tactic for a lot of software salesman. Hype aside, the most important consideration for small and medium-sized businesses is the value of a specific solution to their company, whether it is in the cloud or on their desktop.

Financial advantages

Although user-related costs are relatively low in a traditional IT solution cost model, the total costs including project, hardware and software outlays are often 30-50 per cent higher than with a cloud solution. With cloud computing, consumption is usually billed on a ‘utility’ or subscription type basis that has a low or sometimes no upfront cost. Cloud providers generally offer specific [i]‘modular’[/b] services, such as CRM and email marketing, for a flat monthly fee per organisation or per user, paid up to a year in advance.

Other benefits of this time-sharing style approach are the low barriers to entry. cloud service providers utilise shared service infrastructure in large data centres to ensure data security, reduce costs, reduce management time and IT department overheads, and provide immediate access to a wide range of applications.

If circumstances change, such as the number of users, with cloud solutions organisations can generally extend, increase or even terminate cloud service contracts within reasonable timescales. This ensures any organisation can flex cloud resources as it expands or contracts, thus maximising the return on investment.

Business benefits

Aside from the low cost of the initial outlay, the primary advantage of cloud computing is that it negates the requirement to have local software installed to access the available services and technology. Only limited knowledge is required of the software and services provided over the web. Cloud computing also minimises internal resource requirements and enables convenient, on-demand access to a shared pool of configurable computing resources, software, applications and data storage.

The flexible nature of cloud-based solutions makes it easier to focus on areas which deliver the most business benefits according to the nature and needs of the company. For example, in the case of one SMB law firm, the implementation of a cloud-based platform has helped the business not only to improve its complex internal processes but also — through an intelligent new website — achieve a low cost route to market and helped to generate new business. An integrated content management system provides a framework to manage all the website navigation, page content and link resources for website visitors.

Cloud solutions are also ideally suited to the many organisations that have a varying number of employees or contractors. Rather than investing in hardware and software to run applications and services for a set number of users, cloud computing allows for the provision of dynamically scalable resources to any number of users over the internet.

Flexible technology

Since the concept of cloud computing started to become increasingly recognised in the business world, more web solutions services have been created which use the model.

Whilst there may not be a direct cloud solution match for every type of service required by an organisation, the increasing number of web-based solutions available via the cloud is likely to ensure that a suitable solution is available when considering technology investments or upgrades. With the financial benefit of little or minimal capital expenditure, cloud solutions also offer flexibility as SMB organisations grow and change over time.

A good example of this is the case of a mid-sized organisation in the packaging, paper and print industry supply chains. It has always had a strong web-focus within its business plan and recently succeeded in adding ten event mini-sites and a magazine site to its web offering. A flexible, cloud-based platform has allowed the organisation to easily manage its growing web-portfolio, share information across all sites, create new microsites and give easy access to its full product catalogue and key data.

Time to head for the cloud?

Five key considerations every SMB should make when reviewing a cloud solution:

1. Understand the principles of cloud computing and key benefits versus traditional IT web solutions.

2. Review the costs and returns on cloud computing versus traditional and other IT web solutions.

3. Review your organisational structure and decide where cloud computing services could best fit.

4. Review technology plans to decide whether timing is favourable for a move to a cloud solution.

5. Talk to a cloud solutions expert to find the best fit software for your business.

For more information please go to www.vli.co.uk