The economics of cloud computing
Every business person and newspaper editor I know is talking about the advantages of cloud computing. But what is it, what is the impact on business and what are the financial and obvious benefits?
Cloud means Internet. The computing happens on the Internet – in place of the software you use executing on your computer, it’s hosted on the Internet on a server installed in a data centre commonly staffed by people who are proficient in managing technology. This type of “cloud” software is sometimes called “on demand” or Software as a Service (SaaS).
Some good examples of well established Software as a Service are:
Web based CRM Software (Customer Relationship Management) – Salesforce.com pricing around $9 per user/month.
Small business management and accounting software (small business ERP) – Salesorder.com pricing $45 per user/month.
Medium sized business ERP software – NetSuite pricing approximately $99 per user/month.
There are 3 significant benefits for every business here:
Time, cost savings and reliability
Businesses no longer need a dedicated IT expert to help them select, implement and look after the technology platform thus reducing operating costs and time to deploy. The effort of regularly backing up data is removed as this is usually an inherent feature of the “cloud” software. Cloud software “operators” almost always have fail over systems that can be switched on in seconds should a serious error occur.
Easier selection and wider choice
Using a web browser, businesses now have instant access to hundreds of software packages they can in most cases immediately test and swiftly decide if the software suits their needs at minimal cost. This makes it effective for innovators in large businesses to by pass the restrictive information technology buying processes and easily assess and justify their business case.
Better user experience
The net provides rapid feedback to software makers and has driven significant progress in user interface design resulting in easier to use software thus decreasing learning times and increasing user satisfaction. This of course means faster adoption and higher productivity.