Small and medium businesses

In the case of a startup venture, the discussion of cloud utilization revolves around companies and applications that are technology-oriented, because those are the kinds of companies for which the cloud has particular relevance. When we turn to small and medium businesses, millions of different companies fit this description. Unlike the startups discussed earlier, a cloud implementation isn’t necessarily core to their operation. For many of these businesses, running an application in the cloud may be as relevant as landing a spaceship on the moon.

Let’s focus on three specific examples, each with a varying degree of technical complexity and varying applicability to small and medium businesses in general. A general theme will emerge: such businesses can use cloud services to give a company greater flexibility and position the company for growth through more efficient use of capital and IT resources.

3.5.1 Low-tech example: corporate website

Nearly all businesses today have a corporate website . It may be as simple as a hand- ful of pages with basic corporate information, or it may be an elaborate application designed to market a company’s products and services and generate leads for its sales force. Corporate websites typically begin their lives on a shared hosting service, where they may reside on a simple Linux server alongside hundreds or thousands of other corporate websites for a modest fee around $20/month.

As the corporate website grows in popularity, traffic increases, and the importance of the website to the business grows commensurately until it needs to migrate elsewhere. Before the advent of cloud computing, you could go to a colocation type scenario with a dedicated server for the website (typically about $200/month) and manage

it yourself. Alternatively, you could use a managed-service offering (typically around $800/month). In the beginning, this was overkill because of wasted capacity—the website’s volume could be handled safely on a shared server and hardly taxed the dedicated servers. At the other extreme, when the site started growing and exceeded the capacity of the single server, more servers were needed, each at an incremental cost of $200/month or $800/month, depending on the chosen deployment model.

The cloud model provides a more economical choice, because you can rent a small virtual CPU for about a nickel an hour or $36.50/month. When a company exceeds this capacity, it can add and scale capacity as needed, dynamically. The system deployed in the cloud is able to start small, at an affordable price, while still having the flexibility to grow as and when needed at a moment’s notice.

3.5.2 Medium-tech example: backup and file-storage systems

A slightly more ambitious approach a small to medium business can take is to begin moving some of its traditional IT services to the cloud. One common IT task is the backing up of the corporate file-share systems. Organizations often do this using a tape backup system at regular intervals. They can move these backup tapes to a remote location so that if the office location that contains the original is destroyed, the data on the backup can be recovered. The importance of remote backups for organizations of any size can’t be overemphasized. In the event of a disaster , it can mean the difference between staying in business and going out of business.

Because the cloud is remote and located in an offsite third-party location, it’s naturally suited to offsite backups. An initial copy of the data to be backed up can be sent to the cloud provider on physical media. From then on, differentials can be sent over the internet, providing a safe, offsite copy of the data.

From using the cloud as a storage location for backups, it’s only a small step to using it as the primary file-storage system for a corporate document-management system. As mentioned in section 3.3.3, you must take care if the data is extremely sensitive or subject to compliance or regulatory controls; but otherwise it’s possible to store confidential corporate data in this matter. More than one million users in corporations of all sizes are storing confidential CRM data on the cloud using Salesforce.com .

3.5.3 High-tech example: new product development

The final example relates to a small to medium business that develops software, either as a product (an independent software vendor [ISV] ) or a service (a SaaS provider). These types of companies can use cloud services as a part of a cost-effective and flex- ible product-development process.

The fact that cloud services can be provisioned on an on-demand basis means that companies can develop and test products without the capital expense of provisioning new hardware. For an ISV developing enterprise software, for example, the cost of a quality assurance (QA) test lab to verify the functionality of the solution can be greatly reduced by using the Amazon cloud. A virtual test lab running in both Windows and

Linux environments, and testing compatibility with different web and application servers, and different database environments, such as Microsoft SQL Server, MySQL, Oracle, and even DB2, is possible with zero up-front expense. Once the testing cycle is complete, there’s no ongoing expense associated with the QA environment, and it can be fired up when needed on the next development cycle.

For SaaS providers, where the ultimate offering being developed is a service, gains aren’t limited to the development and testing cycle. After a new product is fully developed and tested, the provider can directly launch it on the cloud with much less financial exposure than was previously possible. When the new product has proved itself, the company can decide whether it’s advantageous to continue to serve it for the cloud, or whether it should be brought in-house for more control.