By James Higginbotham
Small businesses are using cloud computing to find new ways to compete with larger companies. The challenge is to understand what cloud computing is and how it can be used as a competitive advantage.
What is Cloud Computing?
At its core, cloud computing offers automated, on-demand provisioning of resources, commonly including software, servers, and storage. The most common cloud services used today are software-as-a-service (“SaaS”) applications, such as Salesforce.com. As a result of cloud computing, small and mid-size companies no longer need to build, manage, and maintain all aspects of their infrastructure and IT operations. With only a credit card, businesses now have instant access to enterprise-quality software and data centers now exceeding the capabilities of most Fortune 100 companies.
Cloud computing also provides the on-demand growth or shrinkage of resources such as servers and software licenses. This “elasticity” is the key differentiator of cloud computing, allowing businesses to acquire resources when they need them and dispose of them when they are no longer necessary.
As an example, several years ago a major retailer in the toy business experienced a severe shortage of servers during the Christmas season causing a variety of problems when taking orders online. Their need wasn’t driven from month-over-month growth of customer usage, but increased web traffic for that specific time of the year. The elasticity of the cloud would have allowed them to increase their infrastructure based on demand and shrink it once demand decreased. Since that time, the retailer has fully transitioned to the cloud and has been able to handle the increased seasonal demand with their new cloud-based strategy.
Cloud services are often metered or tiered, allowing businesses to pay for only what they need during a billing cycle. No longer are they forced to invest heavily in a large number of software licenses and servers. Instead, they can provision only the resources needed to handle current demand and quickly add more as needed. In addition, utility-based pricing allows for a shift from a fixed-cost to a variable-cost model. This gives smaller businesses the advantage of reducing their up-front investment in IT infrastructure, shifting this cost to other areas.
Between cloud infrastructure and cloud-based applications lies the new space of Platform-as-a-Service (“PaaS”). These platforms offer a group of pre-configured software, tools, and services for the rapid deployment of software applications. This is enabling businesses to take products from idea-to-market faster. In addition, these platforms allow for rapidly deploying new applications to automate sales, marketing, or other internal operations. Many platform services require minimal operational expertise, reducing the need for a large up-front investment in IT personnel.
Moving Beyond Servers and IT Infrastructure
Cloud service providers typically offer traditional IT infrastructure: servers, storage, databases, and networking. Now, rich data sets and skilled labor workforces are just a few of the new kinds of resources being offered as cloud services. Any kind of resource that can be pooled and offered in a virtual or distributed manner is emerging in the cloud computing space. Smaller businesses can take advantage of these resources to offer unique products and services.
Expanding Strategic Talent Acquisition
The cloud is also opening up opportunities for strategic talent acquisition. Businesses no longer need to be located in the same office building, as software-as-a-service applications are enabling them to collaborate remotely. Now they can identify, hire, and tightly integrate highly valued individuals into their company easily and without requiring relocation. The capability to hire strategic assets, along with access to pools of workforce labor on-demand via the cloud, is changing the way smaller businesses are acquiring and managing their workforce.
Creating New Business Opportunities
Data is becoming big business. Emerging data-as-a-service (“DaaS”) cloud vendors enable companies to make their internal data sets available for free or for commercial use. These distribution channels may be used to generate new revenue or to increase brand awareness. In addition, most product companies can utilize available data sets to enrich existing reports or integrate them into their solution. DaaS vendors may offer a wide range of data categories, including: government, social, and location-based data.
Additionally, products architected to take advantage of the cloud usually benefit from lower infrastructure costs, even when the numbers of customers continue to increase. Businesses can take advantage of their existing cloud architecture and product expertise to enter new markets faster.
Cloud computing is more than just some “magical thing” that helps access music from just anywhere. Instead, cloud computing is becoming the equalizer for small businesses looking to gain a competitive advantage against larger, well established companies. It is enabling access to large-scale IT and other resources previously reserved for bigger companies with larger budgets. The biggest challenge is determining how best to use the virtually unlimited resources of cloud computing to their advantage.
James Higginbotham is the President of Blue Jazz Consulting, a services firm based in Austin. He writes articles on technology, business, and cloud strategy at LaunchAny.com and can be reached at: firstname.lastname@example.org
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