I recently had the opportunity to speak to some different groups of business leaders regarding cloud services. All businesses, large and small, are looking for ways to reduce their expenses and drive revenue. Many people are looking to the cloud as a way to reduce their IT spending. It is true, that many technology services can be run much more efficiently with a cloud services provider. However, IT can also be a strategic asset, one that can drive revenue or help reduce other costs not directly related to IT.
Reducing Expenses
If you look at TCO (Total Cost of Ownership), even if you just look at the easy to obtain figures – hardware cost, software licenses, maintenance and support many services are low hanging fruit for migrating to the cloud and trimming expenses right away. Microsoft Exchange Server is a great example. If you own an Exchange 2003 server, Small Business Server 2003 or earlier a cloud migration will almost certainly eliminate a large capital expenditure this year or next as well as reduce your on-going IT costs by a significant percentage. There simply isn't a way to provide that service in-house for less than we can in the cloud.
Before you buy one more server, new or a replacement, get a quote for having it in the cloud. Either as a dedicated server or just purchasing the service you were going to provide. You will likely find it can be done for less in the cloud and you get additional security and a financially backed SLA (Service Level Agreement). Unless you are a large business you likely do not have any internal SLA. Not only that but if your servers have a problem you start spending money to fix them. If a service provider has an issue you start getting money back while they worry about fixing them.
IT as a Strategic Asset
Reducing expenses is great. That goes straight to the bottom line. But driving top line is key because without that cutting expenses doesn't mean much. So how does IT play into this? Let's look at a small business example. Suppose you have a company with ten employees. You have a number of customers that buy goods or services from you. You keep track of all of this in your small business accounting software. You run a single server that handles your e-mail, file sharing and some other basic IT services. You have an IT provider who manages that server and your network for a monthly fee.
Now think about your customers and what they buy. One of the most basic ways of increasing revenue is to market to your existing customers. If you had an easy way of profiling your customers and identifying what they are buying or, more importantly, what they are not buying you would be able to market specific products and services based on what similar customers are buying. This will increase your sales. Sounds great, how?
A good CRM (Customer Relationship Management) system will help you do that. What kind of capital expenditure will be required to get you this type of system? Probably $4k-$10k depending on how many of your employees will need to use the system and how sophisticated the system is. That's a lot of cash to spend. Then there is the time it will take from when you spend your cash to when the system is operational. Once the system is running you have to import data from your accounting system and finally you can use it to generate some revenue. Sounds like a pain and a long way to positive ROI (Return on Investment).
Now consider the cloud. You can get a CRM solution, like Microsoft Dynamics CRM, deployed in the cloud in an afternoon. The cost? Less than $50 per user per month. Let's go back to TCO for a moment. If you spend $6,000 getting an in-house CRM solution up and running for five employees – forget about on-going costs, for now let's just look at the initial investment that is equivalent to 24 months of the hosted solution. When you add the on-going expenses of maintaining the system, fixing it when it breaks, etc. you are now equivalent to three years' worth of service.
I should be able to stop here, right? Why implement it yourself when you can get the solution right away, have an SLA, reap the benefits of it faster and not have to spend your cash? Well, OK that's not entirely true. This is where the strategy part comes in. I left out an important piece of a solution like this – training and guidance. How often are you just able to afford the solution itself without any money left to tune the solution to your business or teach you how to get the most out of it? For most businesses I meet this is very common. Implement the cloud-based solutions AND spend a little of your cash with your IT company or, if they aren't familiar with it, someone who is an expert that can train you and help you get the most out of the solution. This might be $1,000 or it might be $2,500. It really depends on what your needs are, their rates, etc. The point is now you can put some of the cash you might have spent on a shiny new computer into knowledge that allows you to leverage the solution to really generate revenue and profits for your business.
I Don't Need CRM
I used this solution as an example. You can apply this same strategy to almost any IT service. Even to something as simple as e-mail. Do you know how to overlay calendars in Outlook? How about delegating permissions to an employee so they can help you manage your inbox, calendar and tasks? Do you get all of your information on your mobile phone (e-mail, calendar, tasks)? Do they stay "in sync" (i.e. you send an e-mail from your phone and it automatically goes into your Sent Items folder on your desktop and laptop? Even if you know how to do these things with e-mail I will guarantee there are things you don't know or could use help with.
So instead of buying a new server to upgrade your e-mail and replace that seven year old computer that might quit any day, consider the cloud and spend a fraction of the cash on knowledge and support that will improve your business instead of spending cash to keep things status quo.
The Cloud Isn't for Everything or Everyone
We're a cloud services provider, it's what we do. We want our customers to be happy. One facet is knowing when the cloud doesn't make sense. I encourage you to consider the cloud, get a quote and engage in a conversation whenever you are looking at spending money on IT. Don't listen to someone who tells you "the cloud isn't ready" or "you can't use the cloud for this". Get the knowledge first. That said; there are situations where you wouldn't want a cloud solution. Are you in a rural area where your Internet is unreliable (i.e. you are disconnected for long periods frequently)? In that case cloud services might not make sense. We're not as worried about bandwidth as we used to be so if your connection is reliable but slow, the cloud may still be an option. There are some solutions that just don't work well in the cloud though they are becoming fewer and far between.
The bottom line, get the facts. Because this method of delivering technology is exploding there is some fear and ignorance out there. The cloud isn't new, cloud services have been around for decades. They are just becoming more wide-spread, less expensive and easier to get than ever. In fact, I guarantee that you have been using cloud services for years. Do you have a free or low-cost e-mail account (Hotmail, Yahoo, Google)? How about Facebook, Twitter, MySpace, Linked-In, etc.? These are all cloud services.