Cloud computing continues to gain momentum in the small- to mid-sized business (SMBs) space. However, many potential beneficiaries of the technologies are left in the dark about what it is and how they can leverage it for their own gain. SMBs in the know are currently utilizing cloud-based solutions for file sharing, backup, document management, customer relationship management (CRM), accounting, and business workflow.

The benefit of using the Web as a platform is that it provides access to data from anywhere on any device. For example, users can start a project on a laptop at work, edit it on a smartphone on the train, and finish on a tablet at home, suggests Rich Rao, director, enterprise online sales and operations, Google Apps for Business.

Users choose the complexity of cloud activity. “When many SMBs think of moving to the cloud, they think of using a cloud-based or a human resources application,” notes Treb Ryan, CEO, OpSource.

This is an ideal first step to simplifying IT and reducing costs. Additionally, cloud-based servers and storage solutions host software development and testing environments as well as production environments. “SMBs also use the cloud for backup and recovery, archiving, and data storage. These servers are hosted by a cloud provider, such as OpSource or Amazon Web Services (AWS) and are available as you need them, typically at pennies per hour,” adds Ryan.

For SMBs to find the best cloud service or solution, they should first take an inventory of the systems they use and determine which would benefit from moving to the cloud. Additionally, they should review cloud-based solutions from each of the top providers and decide which matches their needs.

“We recommend looking at the Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and Software as a Service (SaaS) offerings. If cloud computing is compelling to you, look at migrating specific systems first, such as email and storage,” suggests David MacLaren, president/CEO/founder, VRX Studios Inc.

Cloud Motivation

Many daily business activities are achievable from the cloud. Depending on an organization’s collaboration, storage, and security requirements, there is a wealth of opportunity. If utilized correctly, cloud-based services provide tools to compete with enterprises. With such a variety of cloud services to consider, we spoke with real world SMBs to get an idea of how the technology is working to improve their operations.

Supernatural Botanicals is an eco-chic bath and body company. The five-staff operation is solely based virtually, but plans to expand into brick and mortar locations in the future.

Robin Feltner, founder/CEO, Supernatural Botanicals is so reliant on cloud-based eVoice from j2 Global Communications, Inc. that she jokes it is the sixth employee. After being featured in Rachael Ray magazine, the company could not optimize the exposure with a local business phone number. Understanding the business potential from the national press coverage, Feltner decided that registering for a toll free number would be a savvy business decision.

After a quick Internet search, Feltner found eVoice and determined it would be a perfect fit. “When we were scrambling to meet production after our Rachel Ray feature, eVoice acted as our receptionist, so to speak,” she recalls. “The service fielded calls for us. Anything emergent came directly through to my smartphone,” she adds.

eVoice enabled the company to set up extensions for customer service and wholesale, which proved to be convenient. Compared with traditional phone systems, Feltner notes that the cloud-based eVoice solution is different, but satisfactory. “eVoice was quick and simple. As an executive decision maker for a business, I am looking for quick and inexpensive technologies that deliver,” she says.

In addition to cloud-hosted voice and email services, cloud file sharing and storing is also popular. Axcient, a startup located in Mountain View, CA, shares its experience with Hewlett-Packard’s (HP’s) cloud infrastructure, which helped launch the company’s core offering.

Axcient is an all-in-one data protection service built from the ground up. The solution delivers a unique and unified platform for backup, business continuity, and disaster recovery that offers ease of use and uptime to the SMB market. It combines the best elements of an on-premise appliance with the cost savings of cloud-based disaster recovery. The pay-as-you-go service features zero infrastructure, license, or software costs, thereby eliminating capital expenditures and minimizing operating costs.

The Axcient data protection service is delivered on an all-HP Converged Infrastructure platform. This means that the Axcient local appliance—which sits in the customer network—and Axcient’s entire cloud infrastructure is now built on and supported by HP technology. “By bringing together the innovative SaaS platform in the data protection space with a reliable and high-performance hardware, SMBs now enjoy true enterprise-level backup, business continuity, and disaster recovery without enterprise-level headaches or costs,” says Laura Kelly, representative, Axcient.

South Cypress is an Internet-based retailer, wholesaler, and distributor of flooring products with an emphasis on specialized tiles. Based in AL, with two brick and mortar retail locations in Birmingham and Mobile, the company currently has eight to 12 full-time employees. They are looking to nearly double the number in 2012. South Cypress sells nationwide and its biggest markets are CA, FL, NY, and TX.

Matt Dyar, CIO, South Cypress, credits the functionality and capabilities of NetSuite Inc. to his company’s excellent customer service. “We have thousands of customers that we deal with, and thanks to NetSuite, we know who and what they want before we pick up the phone. We have a very intuitive IP-based phone system, Fonality. It allows us to grab the phone number and auto launch Web launcher. It then connects to NetSuite to search for phone numbers so we know who is calling and what they have bought in the past. You can’t imitate NetSuite’s capabilities,” says Dyar.

South Cypress started its business with NetSuite, and notices several advantages of the cloud-based solution. First, a reduction in overhead costs. NetSuite eliminates all version upgrading, there are significant reductions in energy costs, and the total cost of ownership is lower.

The solution also provides easy access. According to Dyar, NetSuite provides many options for managing the business, including accessing key performance indicators on an Apple Inc. iPhone, business meeting scheduling, and consistent updates on the health of the organization.

When bad weather makes travel hazardous, the team remains productive by working at home. They also have the ability to place orders on weekends. Even on the road, South Cypress staff can easily draft quotes, process orders, and take credit card information.

While the focus on cloud-based services is often on sales, it also impacts back-end operations. “We have one logistics person to handle our $3.2 million business. We keep focusing our resources on running the business instead of additional head count for back-end order fulfillment. NetSuite eliminates a lot of manual paper processes such as invoicing. It auto-generates it so there is no more re-typing data,” he says.

South Cypress works with more than 70 manufacturers, and prior to NetSuite all back-office operations were on Dyar’s computer. Sharing information with staff at other locations was challenging. Additionally, version control was a problem, as downloading files was time consuming and the company had to constantly double check for errors.

To The Cloud

As illustrated by the SMBs noted above, cloud-based services can alter and improve how an organization is run when compared to more traditional methods. Benefits include immediate access—no installation or maintenance required; collaboration capabilities, as solutions are often available anytime, anywhere; and the elimination of capital expenditure investments. Cloud-based software solutions are often priced per license, per month, which reduces up front investments.

SMBs are using the cloud to save money, increase productivity, and mobilize their business. “They save money by rendering services rather than buying and maintaining hardware to run their back office,” suggests Mike Pugh, VP marketing, j2 Global.

Also, smaller companies are able to quickly launch new products and services knowing that they can build out platforms as and when needed, notes Carrie Gray, executive director of business marketing, Verizon.

There are drawbacks. While security is certainly a priority for cloud-service providers, it’s a fairly new technology with room for improvement. Additionally, control is somewhat lost as businesses rely on a server in the cloud, rather than inside of their office or through a trusted data center.

“Cloud is relatively new and not as secure as a dedicated machine in a top-tier datacenter behind a dedicate hardware firewall, so it is not the right fit for some types of applications,” admits Rob La Gesse, chief disruption officer, Rackspace US, Inc.

In addition to security, reliability concerns must be overcome. “SMBs are often uncomfortable relying on Internet connectivity for critical business functions, as they may have had problems with their ISP or network infrastructure in the past,” notes David Rusconi, principal engineer, Cisco Small Business Technology Group.

Weighing the pros and cons, how cost effective are these solutions? Paul Turner, senior director product marketing, NetSuite, estimates that its customers have been able to cut IT costs by 50 percent or more compared to traditional solutions.

Additionally, it is important to note that as business grows, traditional IT costs increase whereas cloud solutions are not typically affected. This is especially true for those looking to expand internationally. IT is a concern, but with cloud solutions users are paying only for what they use and therefore are able to handle the business risk easier.

“Playfish is a great case study in going global,” offers Matt Tavis, solutions architect, AWS. In 2009, the company grew from 22 million active monthly users to more than 55 million worldwide. Utilizing ASW’s distributed infrastructure across Asia, Europe, and the U.S. enabled Playfish to quickly become a global company with studios in Beijing, London, Norway, and San Francisco. In late 2009 they were acquired by Electronic Arts for $270 million.

Another AWS user, Albumprinter, is an Amsterdam-based startup that enables users to print photo albums, calendars, cards, or works of art from digital images. The company was able to innovate quickly and grow with cloud services from AWS.

“With the rise of digital photography, even novices are able to get professional looking pictures in a click. Albumprinter allows people to take those digital images and print them in many different formats to share with family and friends. The company also licenses its photobook technology to photo retailers, Internet companies, and other channels in Europe and the U.S.—enabling them to offer new photo products to customers and to create new revenue streams,” adds Tavis.