The concept of cloud computing has hit the mainstream, explains Terry Irwin, with the release of hosted data services such as Apple’s iCloud managing to crack the consumer market. Previously the preserve of enterprise-class businesses, the maturity of the technology has made it available to organisations of all sizes, from the sole trader upwards.

Cloud computing is a somewhat nebulous term used to describe internet-based computer systems, access to which can be leased. Among the features of these systems are software applications, data storage, data backup and email. The best-known examples are Google Apps, Microsoft Office 365 and Salesforce.com.

Pros of cloud computing

Cloud computing has a number of benefits for any business, and the majority of them are cost related. Where a business would have needed an extensive IT system to support advanced software, it can now rent access to such systems on a per-user basis. All responsibility for storing data, maintaining and upgrading software and hardware and providing technical support lies with the provider. This does away with the need for an expensive in-house IT department.

As the needs of the business change, additional licences can be purchased when the workforce expands, or allowed to lapse when it shrinks. Known as ‘Software-as-a-Service’, or SaaS for short, licensees need never worry about products becoming obsolete or about planning for major upgrades, as all this is included under the terms of their agreement.

SaaS allows businesses to mitigate the costs of using computer software. The subscription model is ideal for businesses with a large user base, as it allows licensees to spread the costs indefinitely rather than paying them up front.

Cons of cloud computing

Despite the short-term cost savings, certain applications may, over time, work out more expensive than software installed on the computers in your business. The cost of a monthly subscription for access to a typical productivity package can quickly escalate as more users are added to the agreement. Once a SaaS subscription has been purchased, moving back to an ‘on premise’ system can be extremely expensive.

Cloud computing also offers businesses the chance to store their data offsite, accessible via the internet. The hosting company assumes responsibility for storing and backing up data as part of the agreement. However, data storage needs increase exponentially, as does the cost. As most cloud computing providers charge according to different services and models, direct comparisons are extremely difficult.

A further problem arises when attempting to move data between cloud providers. Although technically possible, the delay in transfer can be costly to the business as it comes in the form of a system outage. Such transitions invariably attract additional costs to cover conversion of data types and, potentially, exit fees for terminating agreements.

Finally, all cloud computing technologies rely on a stable and fast internet connection between the licensee company and the provider. If the internet connection goes down, so too does all access to mission-critical applications.

Buyer beware

Cloud computing allows a business to create and customise an enterprise-class IT system quickly and for minimal outlay. Although the technology is relatively mature, the service provision itself is still in a state of flux that could prove costly.

Before making the leap into cloud computing, a business needs to consider carefully the ongoing costs beyond the first year or two of an agreement, as well as the potential impact of an internet outage. If the sums still add up in your favour, cloud computing could be the ideal IT deployment for your business. 

Author Terry Irwin is the founder and CEO of TCii Strategic and Management Consultants. Terry has consulted for a wide range of businesses, from multinationals to start-ups and growing organisations. He has a “hands on” approach and stays involved with client projects through to the achievement of agreed results. 

As well as working to develop sustainable, profitable growth for his clients, Terry has helped many entrepreneurs to devise and implement an exit strategy that will achieve the maximum return – with the minimum tax liability – on the sale of their business.  Find Terry on LinkedIn and at his website .