It appears that a) a lot of small business owners don’t know what “cloud computing” is and b) regardless of whether they know or don’t know they are wary of it. In this post I will clearly and simply explain what it is and hopefully clear up some of the myths and misunderstandings about cloud computing.

Wikipedia defines cloud computing as “cloud computing” is Internet- (“cloud-”) based development and use of computer technology (computing)”. Clear as mud, huh? This is simplest way I can think of to explain what cloud computing is: if you are doing something without installing hardware on your computer or a computer on your local network, you are involved with cloud computing. A great example is email – if you use Gmail, Hotmail, AOL mail, Yahoo mail or anything similar you are using cloud computing. You are using computers and programs that live in the cloud we call the Internet.  Facebook, Youtube, Flickr, Twitter – yep, all in the cloud.

But what does this have to do with business, especially small business?    Essentially it means that as a small business owner you have lots of opportunities to choose whether to buy software (and likely hardware) or choose a vendor to supply services virtually over the Internet.

What are some concrete examples?  What about (lists not inclusive):

• file storage and sharing.  You can buy and install  file server and connect it to your network or use a cloud-based solution like Egnyte, Dropbox, Google Docs or Box.net
• email.  Too many examples to mention, starting with our friends at Google.
• accounting.  Good old friends Quickbooks can be run online as well as newcomers like Freshbooks
• CRM.  Salesforce.com is a pioneer of cloud computing; other entrants to the fray include Batchbook (I talk about them here), SugarCRM, Zoho and Highrise
• Word processing and spreadsheets.  In this post I talk about Google Docs, Zoho and the like
• Document Management.
• Reporting and analytics.
• and the list goes on and on.

What are the pros and cons of using cloud computing?

1. It can be fast and inexpensive to get started.  Whether you have a new business or an existing business, using a cloud-based solution can dramatically cut down the time to get up and running and reduce your initial capital outlay.  If your business needs change rapidly, using cloud-based solutions allows you to add features quickly or even move to another solution more easily.  On the flipside, as your business grows you may find that the capital outlay of in-house applications is less expensive than ongoing costs of a cloud application.  You should always read the fine print and make sure that you can easily retrieve your data and move it to another provider should you outgrow your first choice or if you are unhappy with the service you are getting.
2. Your systems and data are easily accessible.  Wow, this is a big one; think about it, you can access your data from anywhere, anytime.   Using the business center in the hotel where you are vacationing and want to check your Quickbooks?  No problem!  Your salesperson drops their pc in the lake?  Don’t worry, their contact information is safe in the CRM system in the sky.  Cloud-based applications support virtual offices and working from home “out of the box” so to speak.  Downside?  You only have access to your applications and data thru the Internet.  No Internet access?  Internet down?  Have a slow internet connection?  All of these can affect, in some cases dramatically, your access to your business information.  As a business owner you have to weigh the risks of not having access to the costs of controlling your own access (and remember, if you don’t have electricity you are likely SOL anyway).
3. Your information may not be secure.  On one hand, it may not be secure in your office either.  Is it backed up regularly and is that backup in an offsite location?  Is it on a computer or server that is secured properly on the Internet?  Is it physically secure from theft, natural disaster, etc?  Many small business owners don’t pay attention to these factors, making their systems and data LESS secure in their own office than it would be anywhere else.  Most of the companies that provide cloud-based services have shelled out a lot of dough to make sure their systems are secure, safe and stay up.  That said, not all of them do it the same way or in the same degree.  As a small business owner you should sit down and assess the level of risk you are willing to take and with which kinds of data.  Then, as you look into cloud-based applications, make sure you understand each suppliers security precautions and service level agreements.
4. You can concentrate on your business, something you are probably pretty good at.  You can leave the care and feeding of computers and systems to the highly trained and compensated personnel that work for the service providers.  It can be distracting and expensive to maintain technology; most small businesses are better off spending their energy and money somewhere else.

Bottom line? My take is that most of the cloud-based applications are good, safe and secure and are getting more so every day.  While you should certainly thoughtfully assess your individual needs, especially where accessibility and security are concerned, I believe small businesses should seriously consider cloud-computing for many of their needs.  Determining where it makes sense and how to transition your applications should be part of your technology plan.

How do YOU feel about the cloud?

Photo attribution:  http://www.flickr.com/photos/8769295@N07/ / CC BY 2.0

I don’t have a single phone book in my house.  I don’t subscribe to any newspapers.   Local small businesses definitely try to get my attention in other ways. I am mostly annoyed by companies that put magnets on or tape fliers to my mailbox, not called to action.  The worst are those that put fliers in plastic sandwich bags with a few stones and toss them onto my driveway. Really? That is how you want to get my attention?

Long ago, in a small town it was easy for a proprietor of a small business to let his/her customers know what goods or services they provided. Everyone in the town passed by the shop window or come in to visit.  And because everyone talked to everyone else, even if Jane didn’t know Bob could sharpen her knives at his hardware store, when she bemoaned her dull kitchenware to Sarah, SHE was able to tell Jane that Bob had the answer to her problem.

In her blog post Back Noise is so 1880′s Diana Baldwin likens online social media outlets to the local store where everyone gathered and shared information and gossip. I think that is an interesting analogy.

So if there is no local store and no yellow pages and no one reads a news paper, how do you as a business owner get my attention, especially at the all important time when I NEED YOUR SERVICE?  Like when I had to have my fence repaired?  Or when my oven quit working?  Or when my basement is flooded?

I have come to the point in my life where I want to find goods and services online, preferably with local companies. In addition, I want as many of my interactions with these companies to be, you got it, online. This is a problem for small businesses and it is a problem that will only get worse.   After me is a generation that has been brought up completely in a digital world; together we will insist on doing everything online.   We will require more than a brochure-ware website and email address that isn’t monitored. We will require that you do business online.  Completely.

I can hear you now. You are saying “I am in the relationship business and the Internet is so impersonal”. Or “I am in business to serve those in my neighborhood, not folks around the world, so why do I need to take the Internet seriously?”. Or even “All the technology is so expensive, it can’t be cost effective.”.

Right now lots of people use the Internet as a replacement for the phone book. We use it as mechanism for asking others for recommendations for goods and services.  We use it to shout out our wants and needs to any service provider that is listening.  The businesses that know and take advantage of this will prosper in the future.

What does this mean to a small business?

• It means, of course, that you have a website and use (and check) email. It means that I have to easily find your website. If I don’t know the name of your company I am going to search for “Atlanta appliance repair” – will your website show up?

• It means that if there is a local business finder site I will be using it. There are several of these around the country – are you on yours? Does it link to your website and have accurate contact information, at a minimum?  Have you proactively enlisted the help of your raving fans to make sure that there are good reviews on it?
• It means that you need to know what your customer does online. Do they Twitter in frustration because their oven doesn’t work? Do they look at recommendations on local business finder sites or Yelp or any other site? Do they become fans of companies on Facebook?
• It means that businesses need to be prepared to deal with leads that come from online channels and to reciprocate by serving customers online. Based on the needs and wants of your customers, your company needs the processes and systems to transact as much as possible online. Someone needs to respond to their emails and be available to chat. You should consider providing online methods for setting up an appointment, providing quotes, paying invoices, and responding to customer service needs.

None of this is new. Your competitors will be doing this soon, if they aren’t already.  Are you ready?