Cost-Benefit Analysis for SMEs of Cloud Computing

By Lisa Harris	Article Rating:
August 18, 2008 12:30 PM EDT	Reads:	29,838

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The Gifted Amateurs Blog

Proactive companies are dipping their toes cautiously into the Cloud – using it mainly for non-essential applications at the moment, but with a view to extending their commitments if their experience is positive. Entrepreneurs are growing their businesses with limited time, expertise and available budget by drawing upon new web-based technologies such as the Google Docs, blogs and emerging social networks.

Recent articles in Business Week (‘How Cloud Computing is Changing the World’ by Rachael King) and the Financial Times (‘Back to Bust?’ by Richard Waters) both echo how entrepreneurs are growing their businesses with limited time, expertise and available budget by drawing upon new web-based technologies such as the Google Docs, blogs and emerging social networks. They are circumventing the need for increasingly complex IT systems as their businesses grow by continuing to rely upon cost-effective Web 2.0 tools and their own networking skills.

Business Week notes how tapping into web-based applications represents a significant change in the way that businesses obtain software and computing power. It draws upon the example of a $11 billion electronics manufacturing company called Sanmina-SCI which is using Google Apps for email, document sharing and diary planning. Merrill Lynch suggests that such ‘cloud computing’ will expand into a global market of $95 billion over the next 5 years.

The Financial Times describes the example of 2nd Wind Exercise Equipment which has saved over $200,000 by switching its email system from Microsoft Exchange to Google’s Gmail. In a worsening economic climate, cost savings like these are not to be sneezed at for those companies prepared to take a chance with Cloud Computing. The risks, of course, concern the reliability and security of cloud-based systems. As Broadstuff shows there have been a number of high profile ‘outages’ already this year by providers such as Amazon S3, Google Docs, MobileMe and Twitter.

The above examples show that proactive companies are dipping their toes cautiously into the Cloud – using it mainly for non-essential applications at the moment, but with a view to extending their commitments if their experience is positive. For the new business ventures of our Gifted Amateurs, the trade off between the cost savings of Cloud Computing and the occasional reliability glitch is definitely worth it.