The pros and cons of Cloud computing

Growing Business looks at the pros and cons of accessing your software on the web

When Tim James-Parker and his two partners set up, selling automotive and DIY tools in 2003, they quickly realised they needed a way of holding the details of customers who were buying from them. “We were processing around 40 orders a day on our site and needed a way of storing all that data,” he explains. “We’re not technical people, and weren’t good at doing back-ups. So, we were looking for another solution.”

The company bought a package from Netsuite and inadvertently became one of a growing number of businesses to adopt cloud computing. Among the major benefits is a five-fold increase in sales and productivity, and the £1.25m turnover company feels its only technology concern is ensuring that it has an internet connection. Rapid growth Cloud computing is a simple concept. Software and services are delivered over the web and through a browser, meaning you don’t have to install a server or client software. It’s available any time, anywhere, from any device that connects to the internet and is delivered through services hosted by a third party. The concept has been around since the start of the century, but it’s only starting to take off thanks to universal broadband. “There are already many tried and tested cloud applications out there,” says Craig Pennington, vice president of operations at NTT Europe Online. “Think of your webmail accounts, or applications such as Next year should see a rapid expansion and adoption of cloud services.” In October, ISP Easynet Connect provided evidence of the growing enthusiasm for ‘the cloud’ when it released the results of its survey of 270 entrepreneurs. One in four said they plan to start using it within two years, and around half within five years. So it’s little surprise that technology giants like IBM, Yahoo and Google are rushing to launch new products in this area, while vigorously pushing the benefits. Potential benefits “Cloud computing allows firms with limited capital investment to achieve their technology infrastructure goals, without being restricted by cost,” says Martin Bradburn, technical director at ANS Group, a technology infrastructure specialist. “Business email archiving regulations, for example, often require companies to retain emails for up to seven years, an immense undertaking particularly for a smaller business. Before the arrival of the cloud, the storage of so much information would have required a great deal of management as well as the implementation of new and costly technologies.” There are also important cost considerations, as Graham Fern, managing director of technology provider axon-IT, explains. “In the future, small firms will be able to rent the services they require. They’ll have no upfront capital costs, no hardware maintenance, no office space requirements, no hardware or software going out of date, no back-up issues, and so on. They’ll simply pay a monthly fee and have all their IT needs sorted.” But what about the dangers of trusting a third party to host your data and applications. In practice, this involves hosting it in huge server warehouses, which might be in Aberdeen, Mexico or just off Greenland, which sounds far less secure than your old server room. However, Fern and the advocates of cloud computing argue that it’s a far more secure solution. “Security couldn’t be better,” he says. “Your data is on the best hardware, in the most secure physical environment, power protected, continually monitored and updated, and run by experts. There is no such thing as 100% safe, but it’s the next best thing.” It also allows for more remote and flexible working. Robert Whiteside, head of Google enterprise UK & Ireland, points to Cully and Sully, a fast-growing catering firm. “The company’s founders run all daily activity and need to be flexible, particularly as they’re not office-based,” he says. “The technology they use allows them to directly input into customer feedback documents, timesheets and recipes without the hassle of attachments. It improves efficiency and your response time to customers.” Getting it right Like any new technology, implementation is everything. According to the Easynet survey, while a significant proportion of entrepreneurs are planning to use cloud computing, few have looked at the technological considerations. Just one in 10 said they’d investigated internet connectivity issues, only 12% said they planned to increase their internet bandwidth to account for higher traffic levels, while 13% said they would explore business continuity measures to safeguard their connection and only 9% said they would put in place more stringent security measures. If you take the cloud route, you also need to be clear on your legal situation. Chris Coulter, a partner at Morrison and Foerster, advises you to consider where your data is being hosted. “Issues may arise depending upon the location of the vendor’s servers,” he says. “In some jurisdictions local law enforcement authorities may be able to gain access to certain kinds of data stored locally.” Many observers warn against entrusting sensitive personal data, such as police records on employees, to the cloud. Matt Hampton, chief technology officer at security specialist Imerja, says availability of data can also be an issue. “You need to ensure you have access to data when required,” he advises. Most major computing providers now offer cloud services, but before signing up, Ané-Mari Peter, managing director of web development agency on-IDLE, has some recommendations. “Ask about data security, service uptime guarantees, and testimonials,” she says. “And talk to others who use the service.” The future As the market matures, and insiders predict it will grow 30% year-on-year, entrepreneurial firms will increasingly use it to develop product offerings, as well as save cash. Edinburgh-based FreeAgent Central provides online accounting for micro businesses via Amazon S3 storage. Its cloud technology allows clients to track the time spent on a project, raise invoices, and calculate tax liability. Users can scan in their receipts, which requires major data storage capability. The firm stores the rest of its data with an external hosting company. “I can’t see any reason not to do this,” stresses the company’s lead designer Roan Lavery. “If I want electricity, I don’t go out and buy a coal-fired power station – I just buy the electricity I need. “At the moment it’s just small web-savvy businesses that have caught onto the potential of cloud computing, but I fully expect it to grow in the next year or two.” After achieving a five-fold improvement in sales and productivity after moving its website and back office systems into the cloud,’s James-Parker is also convinced of the value of the concept. “I pay £20,000 for six users over three years, and they host 55,000 customer records,” he says. “It doesn’t feel like an expense. Ultimately, it means that my only technology concern is ensuring we have an internet connection – and that allows me to get on with growing my business.”


(will not be published)