by Lisa Kelly

For many growing businesses, IT is seen as both an opportunity and a potential hindrance. Leaders in small and medium-sized enterprises (SMEs) recognise that technology is critical to supporting growth, productivity and competitiveness. But high capital costs, access to scarce skills, and the retention of legacy IT systems often make it difficult to maximise the return on investment and benefits that modern technology offers.

Cloud computing offers growing businesses a potential solution to this dilemma. By using software applications accessed across the web, firms can take advantage of functionality that would otherwise only be affordable by large enterprises, and typically on a pay-as-you-go basis. Issues such as buying hardware, providing technical support, and recruiting specialist IT skills are removed, allowing decision-makers to concentrate on sales, growth and profitability.

However, there are questions over security and standardisation and how to get the best out of the cloud, and at a recent Computer Weekly roundtable event in association with SAP, business leaders from SMEs met to share their experiences of cloud computing.

Delegates agreed that any move to the cloud had to be business-led, and highlighted key issues to be tackled on the way.

Reducing IT costsDarron Walton, managing director of consultancy De Villiers Walton, said keeping IT costs down was vital to a start-up firm. “When we founded our company we wanted a virtual business with no in-house costs to look after our systems. Having billable costs that are baked into the business model meant choosing the cloud, as we pay for what we need as the business expands or contracts,” he said.

Peter Vangeen, owner of executive taxi firm Corporate Chauffeurs, said his family-run business chose the cloud years ago and found it to be “a liberating experience” as it released the worry of looking after a batch of servers.

For Marcus East, head of future media and technology at Comic Relief, keeping costs down at peak times is essential. The charity has a unique challenge in that most of the year it is a normal business but on Red Nose Day it becomes one of the busiest websites in the world. “We need the scalability cloud provides when we take 200 transactions per second on an infrastructure which is only necessary for a couple of weeks,” he said.

In the public sector, the cloud is also helping with initiatives to cut costs. Andrew Lamont, a councillor at the Royal Borough of Kensington and Chelsea, said the council’s use of the cloud has removed IT equipment from offices and released expensive property.

But Richard Swann, head of IT at the Institute of Directors, warned of the long-term impact of committing to a single cloud supplier. “Cloud offers lots of opportunities, but it is not a model for every business. It’s like cocaine; one vendor gets you hooked and that’s a business risk.”

He feels cloud computing costs are not always competitive. “With 250 users on hosted Exchange, we can spend £5 per mailbox and have no links to BlackBerrys. That would push costs up per user to about £45,000 when we could do it internally for less,” he said.

SecuritySecurity was highlighted by the SME delegates as one of the big concerns. Christopher Barratt, IT manager at YMCA England, said that if responsibility for e-mail is passed over to a cloud provider, “I can sue them if they lose my data, but what we have to do is ensure security by using encryption and other tools.”

WhitepaperFive reasons growing SMEs cannot ignore the cloud

a whitepaper from ComputerWeeklyCW +

When a growing business cannot justify developing its in-house IT department, the cloud can deliver pay-as-you-go, access to skilled staff and flexibility. But can SME business leaders trust the cloud with security and standardisation?

in association with

KR

IST

Y-A

NN

E G

LUB

ISH

/DE

SIG

N P

ICS

INC

/RE

X F

EAT

UR

ES

Consultant Neville Buckley said one way to mitigate risk is to use a private cloud: “We do this in India to protect data as the risk of copying intellectual property is greater there.” He also said SMEs must do their homework and find out where their cloud partner’s datacentre is hosted. “Make sure it’s not in a car park that can be got at with wire cutters,” he said.

East said partner selection is “critical” – from the technical, growth, commercial and security perspective. “If we have 500 internal servers, the data risk is with us. If provision is virtualised we can engage with trusted partners to provide service levels and protection if things go wrong,” he said.

Lamont said there will always be levels of uncertainty, citing the troubles in Egypt causing the internet to be brought down and varying rules in different countries about cybercrime and data. He recommended using vendors that guarantee cloud datacentres within the UK. “In the UK, you can’t be shut down. Information can freely flow – it is up to you how you secure it.”

Companies also need to consider how they can take their data back if they choose to leave their cloud provider, said delegates.

In-house IT skillsEast raised the issue of what IT skills need to be retained in the organisation if most of the IT is in the cloud. The people who own a business can see the advantage of cloud from a cost perspective as they don’t require a strong internal resource, whereas the people who run the systems and some users do not want to lose their internal expertise. “We have 350 people and lots of remote workers, but there is some resistance from users who prefer their files to be stored locally, and do not like using a browser to access files,” he said.

Vangreen said, “Any sense of ownership is a misconception if you don’t know how to deal with problems in-house.”

East also posed the question that if an SME grows to a certain size, would there come a time the business would want to bring IT back in-house?

But Modwenna Rees-Mogg, CEO of online news and events business AngelNews, did not expect that to be necessary. “I wouldn’t want to. We will outsource as long as possible because we get a monthly bill rather than having to pay for an IT director,” she said.

InnovationFreeing up scarce IT resources to focus on new areas of business development is an attractive proposition for many SMEs.

Nicholas Bellenberg, IT director of publisher Hachette Filipacchi UK, said in the past more IT people had to run the back-office infrastructure, but now there is “little time to work on the back-office”. “How brave do we be in outsourcing? We can’t say we need more staff to run the back office as the business wants us to focus on innovation,” he said.

East said the value of the cloud is in allowing SMEs to re-engineer and recreate the organisa-tion’s processes and is “an opportunity to introduce innovation”.

As the boss of a classic small business, Vangeen said the cloud gives the company the flexibility necessary to “innovate in the area of customer service, which is the key differentiator that separates us from the competition”.

YMCA’s Barratt said everything is going to the cloud and we should be mindful of what is coming from countries like India as they use the cloud to run their business and innovate. “In the UK you have a laptop and a workstation. In India entrepreneurs run million-pound businesses via an iPhone and a PDA and are doing things on them we’re not doing on the mainframe. If we don’t address the way we do business we will be left behind,” he said.

Peter Heather, head of IT and systems at charity Water Aid, said the beauty of the cloud for SMEs is in starting small. “You can buy at a good price an entry point to an enterprise system so you get effective use without the overhead of running costs. You are not worn down so you can focus on innovation,” he said.

MobilityVangeen says the cloud has brought flexibility and mobility to his business. “I can go anywhere in the world and operate my business by just dialling in as long as I’ve got a phone and a laptop,” he said.

Barratt said the cloud is helping bring the YMCA into the 21st century. “We are working in more countries and have a bigger take-up of services. Young consultants all have iPads and want to access information. We can use the cloud to provide updates as they happen and bring us forward as a vibrant organisation from our legacy and we must embrace technology to achieve that,” he said.

cloud computing CW +in association with

Case study