A report by Gartner estimates that by 2027, more than half of businesses around the world will use cloud solutions to accelerate their initiatives.
Another study shows that over 60% of workloads in small businesses will be cloud-based within the next year.
For a small business, cloud computing is the right strategic move. But if you are just getting started, you might wonder how exactly the cloud can benefit your business.
This guide covers the advantages of adopting cloud computing in a small business set up and the challenges to expect in the process.
Defining a small business
For the purpose of this article, we use the U.S. Small Business Administration (SBA)2023 definition: a small business is a firm that has 100 to 1,500 employees and earns between $1 million and $40 million in revenue.
The SBA details industry-specific thresholds for employees and revenue, but all small businesses can benefit from cloud computing regardless of size, industry, or revenue.
Typical cloud technologies that small businesses can use include:
- Infrastructure-as-a-Service (IaaS) for networking, servers, and storage
- Software-as-a-Service (SaaS) for productivity and customer management
- Platform-as-a-Service (PaaS) for developing and managing applications
- Identity-as-a-Service (IDaaS) for managing user credentials and authentication
- Security-as-a-Service (SECaaS) for data protection and cyber threat detection.
Benefits of cloud computing for small businesses
These are the benefits you can look forward to enjoying when you embrace the cloud:
1. Increased flexibility and scalability
As a small business, your needs keep changing with shifting market demands and even resources. To cope, you need to have the kind of flexibility that makes it easy to align with the current demands.
Cloud computing delivers this as the most prominent benefit. You can scale your computing resources up or down to meet seasonal fluctuations or accommodate growth.
Cloud computing becomes even more critical for small businesses inrapidly-growing industries like shipping and delivery services, healthcare, and online retail. In such fast paced ecosystems, the integration of cloud-based tools makes it possible to adapt to positive and negative changes in areas such as staffing, production, and delivery, without IT hardware limitations.
2. The cloud will save you IT costs
No upfront investment is required on hardware and software, unlike with on-premise tools where you have to buy entire solutions upfront and incur installation costs.
With cloud tools, you only choose the pricing plan that is most suitable for you at the moment, start using the resources and pay as you go.
3. Data security
The real animal in data security is risk. It is a sensitive thing that small businesses don't have the capacity to handle it properly, and a data breach or loss can easily kill the business. But when you use a cloud infrastructure, the security of data is handled by the vendor and this reduces the risk significantly.
4. No more worries about updates and maintenance
Before the advent of cloud computing, maintenance and updates used to be a nightmare for small businesses.
Many small organizations always suffered the ordeal of incurring heavy costs to acquire hardware and software, only to abandon it altogether because they could not sustain the cost of maintenance and upgrades.
But with the cloud, most vendors handle all the required maintenance and upgrades on behalf of clients.
5. Improved collaboration
Working in the cloud promotes seamless communication and information sharing across teams.
The cloud-based solutions that enable this include email, messaging platforms, document sharing, video conferencing, task scheduling, project management tools.
Team members can access these resources from any device with an internet connection.
6. Mobility (ability to work from anywhere)
Employees can access files from anywhere as long as they have internet access and a web-enabled device (smartphone, laptop, or desktop). Small businesses can therefore have a fully mobile workforce and operate without physical premises.
This is a significant enabler for a small organization that is just starting out, as it means it can get the best talent from around the world. No worries about the logistics of movements to and from the place of work.
7. Competitive advantage
Cloud computing is considered a business equalizer because it levels the playing field for small businesses to compete with larger enterprises.
Powerful enterprise-level technology like machine learning, AI, and data analytics becomes accessible to small businesses. They can then turbocharge their operations and match large companies that are driven by powerful systems, including legacy ones.
8. The pay-as-you-go models are friendlier for small business cash flows
This is all about being able to use a service within the confines of the organization’s cash flow, which is a big deal for a small business.
The pay as you go model smooths the cash flow. Since it's predictable, you know what you need to plan for from month to month.
You can proactively strategize when to increase usage, aligning it with your favorable cash flow periods i.e. when the cash flow allows. Conversely, if you foresee that your cash flow may not support the current pricing plan in the near future like say the next two months, you can seamlessly transition to a more cost-effective plan.
This agility in adapting to changing financial circumstances helps you to maintain control over expenditure, ultimately contributing to financial stability.
9. Central storage of files offers one source of truth, which simplifies version control
Version control is a pivotal element in efficient file management within any professional setting. Your small business is no exception.
It's normal for a single document, for example, to undergo several changes by numerous individuals within the company. In the pre-cloud computing era, this often led to a tedious back-and-forth process before reaching the definitive version. Tracking back changes was a nightmare.
In the age of cloud computing, all of an organization's files are centralized on a unified cloud platform. Here, teams know they're working with the same up-to-date version instead of disparate versions scattered across various sources.
This not only eradicates the issue of duplicate versions but also saves time and safeguards the integrity of the work, thus bolstering motivation in the team.
Challenges that small businesses can face when adopting cloud computing
Given the benefits, there is no doubt that the cloud is a savior for any small business. But this does not mean that it’s not without challenges.
Here are the common ones to bear in mind:
1. Vendor clock in
Vendor lock-in is a major concern for small businesses. If you agree to terms of using only one vendor for a period for a particular important solution, you may miss out on other providers who could be offering cheaper subscriptions or even better services.
A multi-cloud strategy is one way to address this challenge. It enables a smooth transition between vendors, should the opportunity arise.
2. Budget limitations
Despite the cost-efficiency of cloud services, they can still contribute to a considerable portion of a small business's expenses.
One key factor to consider is that cloud costs, while flexible with the pay-as-you-go model, accumulate alongside other operational expenses in the business. You must carefully manage these cumulative costs to ensure they remain within budgetary constraints, especially when dealing with tight financial margins.
In addition, the transition to the cloud often requires expertise that may not be readily available within the organization. You might need to enlist the services of a migration expert to facilitate the process, and perhaps invest in cloud migration tools. The added expenses, while an investment in the long-term benefits of cloud technology, can strain the budget further.
3. Transitioning from legacy systems to the cloud can be complex
Traditional brick-and-mortar small businesses face a significant challenge when migrating to the cloud because of legacy systems. Cloud environments can present compatibility problems, complex data cleansing processes, and potential operational disruptions.
There are also concerns over data security, compliance, and change resistance from employees and other stakeholders.
4. Adapting to new workflows can be a challenge
From employees’ perspective, integrating cloud computing can add stress and anxiety to the work environment.
Teams often struggle to adapt to new cloud-based workflows for several reasons:
- A fear of the unknown, especially after working with legacy systems
- New tools and processes may be overwhelming
- Disrupting well-established routines
- Misgivings about cloud performance and security
To overcome this challenge, you need transparent, consistent communication and a change management strategy to address these concerns. If you are a services organization, this change management guide specifically for service management companies will help you do it right.
5. Poor internet connectivity
A robust internet infrastructure is essential for cloud computing in terms of stable connectivity, high speed, bandwidth, and security.
Small businesses located in less connected areas may struggle with reliable internet connectivity. Others may also have outdated internet infrastructure that needs an overhaul, such as legacy cable networks and unsupported protocols.
In such cases, it's important to identify the most critical applications to migrate first and choose ISPs that can meet the requirements.
The cloud can easily elevate your game to compete with giants!
What makes cloud computing truly transformative is its ability to level the playing field. As a small business, the cloud gives you access to the very same tools and resources used by industry giants, despite disparities in budgetary resources. Of course the giants have larger budgets, but the fact that you are using the very same tools that they use is a formidable advantage.
This represents a significant departure from the past when only large corporations had access to such advanced resources on-premises. In today's landscape, businesses of all sizes, regardless of geographic location, can harness these tools at a cost that is not only reasonable but also adjustable to their specific needs.
Key Questions to Evaluate the Benefits of Cloud Computing for Your Small Business
However, before you decide on cloud solutions for your small business, there are a few questions that you need to consider.
What are your IT goals?
According to a Gartner study, the goals of small businesses moving to the cloud can vary, however there are a few top cloud services that make their decision easier.
- Disaster Recovery comes in as the top reason for businesses to move to the cloud, at 66%, because you can ensure that you have remote storage of all your business applications in case of emergency. Remote storage and backup ensures that if something happened to your physical computers, servers, or hard drives, the chances that everything is lost are minimized.
- The costs of physical hardware, servers, and space to store them are ever-increasing. Which is why 55% of SMBs make the move to the cloud. Reducing your infrastructure costs, along with the costs of staff to monitor them, are always top-of-mind for small to medium-sized businesses.
- Adding new users and services can be time-consuming and require constant management of access privileges. With cloud services, however, the ease of management and service scalability is why 46% of SMBs considered the cloud.
- IT is always evolving. With it comes an increased level of complexity that small businesses simply don’t have the time to constantly learn. According to the Gartner study, that’s why 38% of businesses made the jump to the cloud.
Whichever you’re trying to improve for your business, from the reasons listed above, services on the cloud make your business easier to run, grow, and profit.
Is your IT spend continuously growing?
As businesses grow, it’s inevitable that your infrastructure and hardware costs also grow with it. If you regularly see your IT budget getting dumped into big purchases to scale up your server, or to constantly repair ageing technology, then the lower total cost of ownership available through cloud computing could be pushing you to make the move to the cloud.
One of the great benefits for SMBs is that cloud services are often priced per unit, per use, or on an unlimited package. While enterprise business may take advantage of a pricier unlimited package, small businesses can see a greater return-on-investment from per-use fees that mean they’re only paying for what they’re using — yet have easy access to scalability to account for fluctuations in server allocation.
Is your IT team struggling to stay on top of trends?
If you have an internal IT team, are they stretched too thin trying to manage your complete infrastructure and therefore don’t have time to focus on innovative ideas that can move your business forward? If your business goals aren’t supported by your IT development and goals, it may be time to reduce some of the strain on your staff by opting for cloud solutions for your business.
Daily tasks that your IT team needs to keep an eye on include server backups, maintenance, and reboots. If these are things that they’re spending all of their time monitoring, they aren’t given the ability to be truly innovative.
On the other hand, if your business is relying on tech-savvy employees instead of an internal team, you could be wasting man hours on mundane tasks, and running the risk of falling behind in not only IT but in your business. A truly innovative SMB works strategically to implement technology that moves your business forward — instead of just focusing on keeping you afloat.
Are your staff already on the cloud?
A recent study found that 46% of employees are already using a personal cloud. Of those, 40% of them know that they’re going against IT rules, but are taking advantage of tools that increase their productivity or enable them to work from home.
In fact, 1/5 employees have uploaded sensitive company information to public file sharing programs.
If your business requires the storage or dissemination of confidential information, these behaviors simply won’t do. The fact of the matter is that your employees want to be able to work from the cloud, but your responsibility is to ensure that your customer or client information is always safe and secure.
Hybrid/private/public — which cloud is right for you?
Depending on the levels of security you require for your data, the types of software your business wants to work with, and if your business goals include increased collaboration, you’ll need to decide on the level of security within your cloud.
There are a number of different configurations available, from the openness of a public cloud to the security lockdown of a private cloud, but decisions will be different based on your compliance regulations and business requirements.
For a complete cloud assessment, choose the right cloud services provider, which can walk you through the steps to set up the cloud that suits your requirements.