Which businesses benefit from cloud computing?

Cloud was the defining trend of business IT in the 2010s. Between 2009 and 2021, enterprise spending on cloud infrastructure services rocketed from US$1 billion to US$178 billion. It is not too late for small to midsize enterprises (SMEs) to take advantage, but some owners may not understand how a cloud solution could benefit them.

‘Cloud’ can mean different things to different businesses, and what works for one may not work for another. Here, we take a brief look at the history of cloud computing, explore how cloud-based software works, and ask how SMEs can benefit from these technologies.

What is cloud computing?

The cloud is a development of one of the major trends of the 90s and 00s —virtualisation. This technology allows one physical component to host multiple virtual ones, each one doing a different job, but running on the same underlying hardware.

For companies running lots of servers, this was good news. It made their IT infrastructure more flexible because it’s easier (and cheaper) to create, configure, move, and delete virtual machines than it is physical ones. Plus, they could run more machines using less equipment.

The cloud took this to the next level. Cloud providers —including tech giants like Amazon, Microsoft and Google— began hosting virtual machines in giant data centres. Companies could use these machines on a pay-as-you-go basis and access them over the internet without worrying about any of the physical infrastructure. Over time, the cloud providers added more and more services to make IT managers’ lives easier, so companies shifted huge parts of their IT estates —all of it in many cases— to the cloud. Now, Infrastructure-as-a-Service (IaaS) is an everyday part of life for any IT professional.

What is cloud software?

The cloud created a particularly attractive opportunity for companies selling business software. Traditionally, they had sold their programs on discs, and customers would deploy the software on their own computers, buying licences for each machine. Once the customer bought it, they were responsible for installing it, updating it, and maintaining the hardware.

With the advent of the cloud, vendors could offer their software as a service (SaaS). Instead of putting discs in the hands of customers, they could install the software on virtual machines in the cloud and allow customers to access it for a monthly or annual fee per user. They could also allow customers to store their files in the cloud and collaborate with each other more easily when they all use the same infrastructure.

Which types of SMEs benefit from cloud computing?

All kinds of companies can benefit from cloud solutions, depending on how they use it. Even though the largest public clouds are run by big tech, there are many opportunities in the wider cloud economy for small businesses.

Small software companies

Being able to provide Software-as-a-Service via the cloud gives small software companies access to a global market. They can sell their goods via cloud providers’ online marketplaces and allow customers to get started in a few clicks on a pay-as-you-go basis. 

Because they look after the software hosting, the software providers have control over how it’s hosted and when updates get applied, so customers have a consistent experience. And the subscription-based payment model also provides the vendors with a predictable income stream.

SMEs in general

The pay-as-you-go model of the cloud has allowed SMEs to access many technologies that would have previously been reserved to giant corporations or government institutions. Instead of owning an expensive supercomputing cluster, for example, SMEs can run jobs on cloud servers for a few hours at a time.

They also have more elastic resources. If a company’s eCommerce website gets a sudden spike in traffic for one hour every day, they don’t need to keep expensive servers in reserve to handle it. They can scale their capacity up or down in the cloud automatically in response to rising traffic levels, paying only for what they use.

And thanks to SaaS, SMEs can quickly access software without having to worry about hosting or maintaining it. This is especially useful for companies without a dedicated IT function. SaaS tools are designed to be user friendly, too; employees can often access them through their browser or a mobile app.

Tech startups

The cloud is the default choice for digital startups. It allows them to build the computing infrastructure they need quickly, with almost no capital outlay, and configure it on the fly as they build their products. 

Cloud computing services often productise their services in ways that make it attractive to develop apps on their platforms. This means those with digital skills can experiment with cutting edge services in areas like artificial intelligence (AI), machine learning, natural language processing, and quantum computing, for example

Small tech consultancies

Cloud technology continues to be big business. Gartner estimates that worldwide end-user spending on public cloud services is set to beat expectations for 2023, growing 20.7% compared with 2022 to total $591.8 billion.

Demand is certainly there, but moving to the cloud can be a complex process, so companies are looking for expertise and experience to help them make the right decisions. This is an opportunity for consultants to help them design, build, migrate to, and run a cloud environment.

Are there any downsides to the cloud?

The cloud promises greater flexibility, speed, and scalability. Companies can turn services on and off as they need them, but they can also get carried away. It is possible to run up high bills on pay-as-you-go services, and managers may discover that they could have spent less had they just bought their own servers in the first place and hosted them on-site.

Another potential issue for users of SaaS software is the fact that the provider retains control of updates. They may make changes to the software that don’t suit your business, so it is important to check what a vendor’s policy is before signing any agreement.

What are the security risks of cloud computing?

One criticism of cloud computing is that you’re putting your company’s data on ‘someone else’s computer’. This is true, though cloud service providers go to great lengths to demonstrate the levels of security they provide. It is fair to assume, also, that companies that make billions a year from the cloud, and supply vital infrastructure to government and military clients, can dedicate more resources and expertise to security than most SMEs.

However, cloud providers also make it clear that while they take care of the data security of the cloud, you are responsible for the security of any infrastructure you run in the cloud. The same best practices of IT security apply to cloud deployments as they do to your on-premises IT —plus there are many additional considerations when accessing resources and transferring data via the web. If you are unsure about how to set up your cloud environments, seek help from partners who have experience in the field.

In summary

Cloud is the new normal for many businesses. Whether your SME uses Infrastructure-as-a-Service or Software-as-a-Service, the cloud can make IT operations more flexible, scalable, and affordable. As long as you pay close attention to your cloud bills and stay on top of the latest security practices, opportunities await.