Recently Cloud Computing has been all the rage in the tech world, with hundreds of online articles and blog posts discussing method and value, and hundreds of small business owners wondering if they should take the plunge into this new world. After all, they just figured out their current IT infrastructure.

First off, what is “Cloud Computing”? A quick trip to the ever faithful Wikipedia reveals:

“Cloud Computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on demand, like the electricity grid.”

This most commonly plays out in “Web Based Applications”, where you are using web browsers (IE, Firefox, Chrome) on your local computer to access data elsewhere over your local internet connection.

For example, if you conduct your banking online you are participating in Cloud Computing.  Your internet browser is displaying an application whose code and data are not stored as software on your local computer, but instead reside on a server in some far off distant land. 

More and more, companies are choosing to conduct business with cloud based software and platforms such as Google’s “Google Docs” and Microsoft Online Services’ Exchange, SharePoint, and Office online.  Barracuda Networks even offers cloud based firewalls and other security appliances.

Even our music is making the journey into the “cloud”, check out this interview from NPR’s Marketplace on this very topic:

http://marketplace.publicradio.org/display/web/2010/07/26/pm-records-tapes-cds-mp3s--now-clouds/

As the business owner or the CTO of your company, what are the pros and cons of Cloud Computing? Let’s consider a hypothetical company; we’ll call it “Larissa’s Jewelry Design”, and see how it fits them. Larissa’s is a startup and she has 10 employees including herself.  Can cloud computing help her get off the ground?

Cost:

The big question, is cloud computing cheaper? Let’s look at our example company and do some quick and simple math:

If Larissa goes with a local server, she’ll need to buy a one with Exchange (for email), and have an upfront cost from anywhere from $3000 to $4000, including backup software/hardware.

If she goes with Microsoft Online (cloud) services, she’ll more than likely need a local, but cheaper server for Active Directory, which can be as cheap as $1,000, and pay a monthly $50 for her MS Online Exchange/Outlook.

If we do the math, we reach the conclusion that while spreading out the cost over time may be better for cash flow and startups, over time you end up paying more with the Cloud.

Flexibility:

For a company like Larissa’s, one of the most attractive features of Cloud Computing is the flexibility of set up, cancelation, and changes in service.  The amount of time and upfront cost in which she can spin up online Exchange or other similar services is minimal compared to a local installation.  Adding or removing capacity and other needs are also much simpler than if you had a local install. For example, if Larissa was running out of storage space on her local server, she would need to purchase a set of Hard Disks, have someone install them (which will create downtime), and reconfigure Exchange to save mail on that new chunk of space.

With cloud services, she simple requests more space, pays the difference, and the upgrade happens with very little planning and no downtime.

Furthermore, with cloud services the hassle of deploying, updating, and removing local software like Office is not needed. That role is provided by the vendor whom your services are through.

There is also less upfront commitment. If you buy a local server and software, and things don’t work out, you’ve already spent that money and have that server on hand. With cloud service, Larissa pays as she goes, and can simply cancel and walk away if the startup doesn’t work out, or her needs change.

Security:

Is Larissa’s data safe in the cloud?

Obviously vendors would say so, and they often tout the security of their datacenters where your data is stored.

One clear advantage of Cloud Computing is that Larissa wouldn’t be storing her data at her local office, so she wouldn’t have to concern herself with backing up that data for events like a local fire or a robbery.

However, your data in the Cloud is still a target. The reality is that your data and Larissa’s data and many other companies’ data are right alongside each other on the same physical server. You can pay for a “Dedicated Server”, but that is very costly, and would far exceed the budget of Larissa’s small business.

Much like a bank with your money, large cloud providers have made significant financial investments into security, but putting your data into a common “bank” makes your data part of a bigger and more attractive target for the bad guys. For example, in July 2009 Twitter’s Google Docs account was hacked into and more recently the Treasury Department’s Cloud data was hacked into in May 2010. The bottom line is, while successful attacks like these happen from time to time, they few and far between. Your data is generally safe in the cloud.

For more information of those security events follow these links:

http://www.businessinsider.com/twitters-secret-documents-exposed-2009-7

http://www.infoworld.com/d/security-central/us-treasury-web-sites-hacked-serving-malware-624

Features and Customization:

While Cloud Computing seems to be racking up the points in other areas, here is one where local installs still has the edge. Cloud options typically are simpler, watered-down versions of their locally installed counterparts. Another item to consider in this area is third party applications. There are numerous third party applications that tie in with Outlook that won’t function with Outlook Web Access, like VoIP application or PDF writers. This also applies on the server side; Larissa’s IT providers will have more flexibility to meet unique end user needs if the service was not in the Cloud.

Accessibility:

Products like Google Docs and MS Online Services offer access using your web browser from any computer with an internet connection, which is a great feature, especially for small, agile businesses.

While that’s nice, most of us are not using more than two or three computers regularly. New releases of locally installed products are shipping with more features for “on the road” use, like Outlook’s “Outlook Anywhere” which allows your locally installed Outlook to connect its home Exchange Server from anywhere you have an Exchange connection, and local Exchange Server installs have OWA (Outlook Web Access) will give end user a web based view into their local mailbox from any PC with an internet connection, even Macs.

So there you go!

I hope this blog post helped you ID some of the pros and cons that come with Cloud Computing. In short, it all depends on your business, and its needs and qualities.

Questions for your business? Leave a comment below or call me at 301.663.6000 x182.