The Cost Impact of Cloud Computing

Enhance your business with cloud computing

Enhance your business with cloud computing

Cloud computing can transform a small business’s operations, cut down on information technology costs and enable employees to access company data online at any time or place. However, those benefits may come with a price.

“Cloud computing can save you money,” says Kevin Jackson, chief executive officer of GovCloud Network, a company in Washington, D.C. that helps businesses leverage cloud-based services. “But there are hidden costs as well.”

If you’ve been thinking about cloud computing for your business, here are four areas in which cloud computing can impact your bottom line.

Business Growth

One benefit of cloud computing is that it enables you to service multiple people at the same time with the same infrastructure. As a result, you don’t have to finance new equipment or buy new software every time you add an employee or client.

However, as your business evolves, such as adding large numbers of employees or product offerings, cloud services tend to become more expensive. For example, you may pay one rate for the first 15 people with access to the cloud and a higher rate for the next 25. “The bigger your business, the more expensive cloud computing may be until it may be cheaper to buy your own infrastructure and to implement it,” says Jackson. “Especially if your requirements are static.”

Data Security

In some ways, information on the cloud is more secure than data stored on a desktop, Jackson says. After all, cloud service providers spend a lot of money to protect your data, and if a security breach occurs, the service provider incurs the costs of fixing it.

But if sensitive data such as your customers’ credit card numbers is hacked, not only might you be sued for failing to protect the information, but you may lose the trust of your clients.

“If the information is so key to your business that you could never recover from its loss, do not put it in the cloud,” Jackson says. Performing the required due diligence is the responsibility of the small business owner. “Organizations must always match the security and safeguards used with the sensitivity of the information and data being protected.”

Employee Downtime

If you’ve ever experienced a computer crash, you know how much an equipment malfunction costs in lost time, money and productivity. If your hardware goes down and your data is on the cloud, you can pick up right where you left off using a different computer, tablet or even smartphone.

On the other hand, if you’re depending on the cloud to get tasks done and the service goes down for an hour or two, that lost time can cost you money if you don’t have a backup.

Equipment Upgrades

One of the benefits of cloud computing is that the cloud service provider has the responsibility of upgrading the technology. “In order to maintain their business and give you the best service, the service provider will continually update the service,” Jackson says. At the same time, cloud services are typically accessible via myriad devices so you don’t need the latest and greatest computer to work on the cloud. As a result, you may be able to spread out your hardware purchases.

However, you have no control over when the cloud service provider will update the software or possibly get rid of a feature you like. “When you’re leveraging cloud services, change is constant and you have no control over it,” Jackson says. “Some will see that as a downside.”

When it comes to the costs of cloud computing, the key is determining whether the benefits outweigh the costs, Jackson says. “Cloud computing requires risk management, due diligence, effective service level agreements and active metering and monitoring of IT services being consumed.” When used effectively, cloud computing “is a real sea-change in business.”

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