Advantages & Risks of the Cloud for Small & Medium Sized Business

If you’re a small to medium sized business (a few to a few hundred) there’s a good chance your using some form of Cloud application, be it Slack, Trello, Google Workspace or Microsoft365 / Azure. If you’re looking to increase your use of Cloud services, and many are, then there’s some business factors to consider. We explore some of the advantages and disadvantages here.

Advantages of Cloud Services for Small to Medium Sized Business
The first consideration of course is cost. In our experience whoever the Decision Maker (DM) is, most often the owner or CEO, on a Cloud service (here’s a definition of the Cloud), they look mainly at the monthly or annual cost in hard terms. But there are hidden costs as well, such as moving data into the chosen Cloud service, ensuring it can be moved out later etc. These are the soft costs.

Generally, you will want costs to be lower. A key cost advantage today is cybersecurity, namely data breach protection. Over and above general operating costs of any service (Cloud or on-premise) is cybersecurity. For a small business at <$10M in gross revenue, this can get expensive. So moving into a Cloud environment can significantly reduce the costs, including on insurance.

Other advantages include being able to access other vendor applications offered on a Cloud platform like Azure, Google or Amazon. One great example is the growing range of Artificial Intelligence applications that you’d struggle to afford buying on your own. Another key advantage is reducing technology debt significantly, in terms of software. You’ll still need to upgrade hardware, but you can avoid the pain of ageing database and application license renewals and replacing on-premise gear. All items that need to be factored into your cost considerations. And don’t forget power outages and internet outages. If Azure or Amazon goes down, we’ve got far bigger problems going on.

Risks of Cloud Services for Small to Medium Sized Business
Sometimes keeping some software on-premise can be an advantage, but this is increasingly less so. There are two main disadvantages that can be managed but are often forgotten by IT directors and managers and they are; variable costs and poorly negotiated SLA’s (Service Level Agreements.)

We’ve seen a number of cases where Cloud costs have gotten out of control just because it is so easy to add on some kind of application such as analytics or project management tools. Suddenly your costs are up and your Cloud environment is a mess. Keeping a close eye on your Cloud environment is critical. If you have an IT manager/director, they should provide senior management with a quarterly report on applications and costs. In some cases, you can stand-down applications you aren’t using to keep costs managed.

SLA’s are a whole other beast. Most of the terms in SLA’s with the big Cloud players like Google, Amazon and Azure are unchangeable. Pricing and the degree of service however, can often be negotiated. If you’re going to sometimes need a lot of server space for a project, be sure you understand surge pricing and ensure the provider gives you accurate accounting of when you use surge services such as extra storage, processing and bandwidth. Many companies don’t and then face a battle over invoices.

So while there are more advantages to moving more towards Cloud based services, there are some risks that you’ll need to address and be aware of. They are traps we’ve seen more than a few businesses fall into.

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