SMBs and cloud computing: The financial benefits are undeniable

Cloud computing is rapidly finding favor among small businesses with an estimated 78 percent of companies forecast to adopt this technology by 2020. And it makes sense, considering the technology has liberated businesses from the shackles of limited storage and memory imposed by external hard drives and computers.

Moreover, cloud computing has introduced numerous benefits to startups and small businesses, such as augmented production and reduced expenses. This increased efficiency has enabled users to focus on their organizations and save money.

So, if you’re a small business owner with a limited budget, here are several ways how implementing cloud computing positively impacts your finances:

Cloud computing optimizes hardware for reduced costs

Financial Case for SMBs

Cloud computing technology introduces natural economies of scale. Thanks to the features and functionalities of cloud computing, the inevitable ups and downs in your workload are properly utilized and smoothened.

Now, your workload will rely on the same server infrastructure as the other computing needs of your organization. As a result, the cloud computing server provider is able to optimize the hardware requirements of its datacenters, thereby lowering your business costs considerably.

Minimal cost of power

Cloud Computing
Flickr / Brendan Wood

When you switch to cloud computing, your business begins to consume less electricity. That is expected from the economies of scale discussed above. The better that the hardware in your company is handled, the more efficient the power usage will be. And for a person running the internal datacenter, this bodes well for the servers that are normally underutilized and waste energy.

You no longer have to deal with your office space being occupied by several feet of electric cables, nor do you have to worry about managing the 20 or more computers and external hard drives.

In the process, not only do you decrease your electricity bill, but you’re also in the unique position of converting your small business into a “mobile office” where your employees are able to carry on with their work, albeit remotely, via smart devices.

Take, for example, the AWS service offered by Amazon to companies worldwide. More than a million clients across 190 different countries trust this technology to provide high computing power capacity, almost 10 times greater than that of the next 14 competitors.

Power capacity and processing speed also play key roles when it comes to power consumption in SMBs. Compare this with cloud computing providers that charge you a lot less for electricity than the amount spent on dataserver and datacenter, and you will be able to arrive at the right conclusion.

Limited cost of people

When you analyze the computing expenses of your business, you will notice that the largest single line item on the list is the staffing budget. For a lot of companies, this cost constitutes over half of the total. That’s a lot of money, but it is necessary because solid IT personnel are hard to come by. And if you employ a bunch of IT people like Homer Simpson, you will have many other problems to consider! Just make sure you have plenty of donuts lying around.

When you do find someone with the required skills, you have to take care of their salary, their employment costs, and benefits — all of which exceed the price of software and hardware. And this is before you take into account the cost of hiring reliable staff with a decent amount of experience.

The moment you take a leap to cloud computing, a part of the money invested in the service pays for the provider’s staffing expenses.

However, the amount is still smaller compared to what you would have had to pay if the work had been taken care of in-house. And it’s all due to the economies of scale. Plus, your IT employees enjoy the freedom of diversifying and acquiring new skills — may be even in cloud technology — once they complete cloud migration.

This way, they get a chance to contribute their value-added expertise and services to other parts of the business infrastructure.

Also, know that moving to the cloud does not mean you have to let some good workers go from your business. A lot of companies that switch to cloud computing choose to redeploy their limited yet important IT team to sections that earn more money for the company. And yes, this does mean you may not have to hire anyone for a few months or a year, for instance.

In addition, from another vantage point, if someone is barely getting by and has not turned out to be the all-star performer you thought they would be, you could let them go and have someone you know is reliable sit in their seat.

No capital costs

Cloud computing technology

Companies that run their private servers have to sacrifice a lot of money upfront in terms of capital costs. But when you’ve embraced cloud computing for your business, you no longer have to worry about financing that capital investment. Someone else will do it on your behalf.

A lot of organizations argue that running servers on your own has its share of advantages. For starters, the accounting team is able to work their amortization magic so that it appears as if the expense gets spread across the life of the server. However, the truth is, the money must still come from somewhere. And this type of capital cannot be invested into the growth of the organization, either in the form of a line of credit or actual cash.

The scalable nature of cloud computing means that you have the option of starting small and then progressing to a larger memory storage once your business takes off.

Staying prepared without wasting resources

A business that runs its own servers must buy a lot of hardware to prepare for any sudden failures or emergencies. In the worst case scenario, they might have to duplicate everything as well. We have all seen the TV show “24” — backing up your information is pivotal. You never know when someone may try to hack in and cause you trouble.

But if the spare hardware simply lies idle in your company, you are doing nothing but needlessly wasting money on maximizing uptime. That is why you should allow a cloud computing technology firm to handle the redundancy requirement instead.

A regular cloud has multiple locations for its datacenters, and it mirrors your apps and data across at least two of them. So, the economies of scale in cloud computing allow you to prepare for a contingency and you don’t have to spend as much money doing that as with personal business servers.

The primary thing that separates a small business from a major player in the industry is money. And cloud computing is a perfect way to level the playing field (the world is getting even flatter). And it helps smaller organizations achieve more with less, and in the process, helps them thrive.

Photo credit: Flickr / Damien Pollet

2 thoughts on “SMBs and cloud computing: The financial benefits are undeniable”

  1. Can you refer to any studies which proves or at least back the bold statement that financial benefits are undeniable with cloud computing?
    Such as $ saved moving a workload to IAAS?

    In my experience (and I could prove as well as back this, except NDAs prevents) cloud is more expensive than on premise. Some IAAS cloud does however bring other features and capabilities, but only some.

    1. Benjamin Roussey

      Hello Soren,

      I may write another article on this topic. Thanks for the feedback. Interesting. I hope your day is going well.

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