Sky is falling: Will the cloud end up bankrupting your small business?

Everywhere you look, you can see businesses of all sizes jumping onto the cloud computing bandwagon. Whether its cloud storage services like Dropbox or productivity-in-the-cloud solutions like Office 365, the days of having servers sitting in your back room and installing software directly onto your desktop PCs and laptops look like they’re numbered.

But is this revolution in computing all well and good when it comes to actually running your business? The paradox is that if your business is of the smaller variety, the risks involved in moving to the cloud may eventually trump the up-front benefits you’ve been experiencing. Because if you don’t carefully watch what you’re doing and instead subscribe to cloud services right and left, your burden of subscription costs may end up running you right out of business.

To gain more insight into this problem I recently approached Ron Allen, one of our avid readers of our weekly IT pro newsletter WServerNews. Ron has worked for many years in the field of small business information technology consulting and support, and his insights into these matters are very astute. I recently asked Ron to allow me to interview him on this subject for the benefit of those of our TechGenix readership who own or support smaller businesses so they can reconsider any cloud migrations they may be planning lest they end up later experiencing buyer’s remorse.

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MITCH: Ron, thanks for agreeing to let me interview you about how costs for cloud services may end up putting lots of smaller businesses out of business with disastrous effects on our overall economy. Let’s start with your background in IT and computing: Can you share a bit about yourself for our readers?

RON: I began in the very early days of computers, computer integrated manufacturing specializing in CAD/CAM, shop floor control, and quality control systems on DEC and IBM mini and mainframe systems. Evolving with the technology and into a more traditional IT role, I began working as an independent consulting systems engineer for small businesses.

MITCH: I understand that you’ve worked with a number of small businesses over the years. What’s your overall take on how small business owners are feeling about the plethora of turnkey cloud solutions being marketed to them nowadays?

RON: Aside from cost, it becomes a trust and control issue. When companies have run for a very long time on say, Office 2003, etc., and any version of SBS, they have had control and contained costs. Many companies will run specialized applications, especially those in the accounting and engineering fields and some of those apps are now going to the cloud. So, owners ask, where is my data? Is it backed up? Can I get it back… and what about the rental/subscription costs?!?

MITCH: What are some of the more common cloud services that small businesses tend to use?

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RON: In all the doubt of cloud services the one that has proved to be, in my opinion, of great value for small businesses is Exchange Online. In the SBS days, Exchange was intertwined with other Microsoft applications (which we understood was not a best practice but…) and it took prowess to manage and keep running from a consulting perspective. Email was, and still is, a lifeblood to the organization and for $4-per-month per-user I could justify the move. But there still is the backup issue as Microsoft does not provide one for the user level. So now I have implemented a solution for Office 365 backup from CodeTwo to address this, but again it is also a subscription-based service but works very well. Overall, I feel the time I need to spend managing is less for me and the client doesn’t need to implement a virtual Exchange server. [EDITOR’S NOTE: Click here for TechGenix articles about Exchange Online]

MITCH: Are there any cloud services targeting smaller businesses that you would generally recommend they avoid using?

RON: I use Hyper-V on local hardware to establish a domain controller and application/file server for small companies and have recommended them to store/backup data locally. In other words, stay away from cloud storage as generally, they have too much to store there anyway without being too costly. The local disaster recovery products I use allow me to recovery a complex client in a couple of hours.

MITCH: Two of the benefits that were often touted early on for cloud computing were less capital outlay required and predictable expenses for budgeting purposes. Instead of buying a server system for thousands of dollars upfront and amortizing the expenditure, the business could lay nothing down and just make small monthly payments for running a virtual machine in the cloud. When I heard that my first thought was that it sounded like a bait and switch.

RON: Hmm. Most small businesses, say with 25 to 75 users, can and will function just fine using reconditioned equipment from a reliable hardware supplier and do not need to incur the capital expense of a “totally” new server every three years. I stress evaluate your applications and longevity for them to run on a server and will it run for the extended lifetime provided by Microsoft. If yes, then run it for three to five years. Virtualize servers! All small companies should be doing this to reduce hardware. I also do the same for Windows 10 desktops. I have a supplier in the Detroit area that can furnish me with refurbished computers that will get me three years of service at half (or less) the cost of new.

MITCH: If you were going to advise a small business owner today about making use of cloud solutions tailored for meeting their needs, what kind of advice would you give them?

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RON: This is the toughest. Evaluate, evaluate, and evaluate again. What is critical? Do you know where you are going and growing? The cloud model really revolves around growth (cash flow) and with the volatility of our current economics, it is a tough call. Computing needs to become a vital part of your strategy and not just an expense, so a bit of a mind-shift is needed.

MITCH: Where do you think all this cloud services stuff is going to land us in the end? What’s it going to do to our national economy?

RON: If all prevails as the large cloud corporations want, I see little choice as to whether to move to the cloud or not. Virtually all major applications are going to be SaaS and probably some smaller specialized ones too. Microsoft, Google, and AWS all are pushing virtual servers and desktops in the cloud so local hardware requirements will be changing. More focus will be spent on networks (WAN / LAN) and network redundancy and universal threat management will be a cloud device and subscription as well.

The cloud has already impacted small consulting companies and independents as now tech support is shifting away to larger MSPs and cloud providers. But I do often find myself having to intervene to help navigate through issues. So maybe it is just different?

MITCH: Anything else you’d like to add on this subject?

RON: Small companies usually do not have strong internal IT resources so they will be dependent on the providers to fill this void. The one hopeful item is that is a strong relationship is maintained with your client they may come to lean on you more than before to navigate the positives and negatives of cloud services. But it is an increase in cost to the client, no matter how you slice it, it is only a matter of time to see who can survive. Cost has to be passed on, not absorbed.

MITCH: Ron thanks very much for giving us some of your valuable time.

RON: Thanks for the opportunity.

Featured image: Shutterstock

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