Cloud Computing for Small/Mid Business

Created by Joe Nemastil on 2009-06-25

What's the Buzz About?

Using PCs and PC Servers for personal and business productivity is nothing new. What is changing is how small and mid-sized businesses (SMBs) are saving money using those machines differently.

Total cost of ownership (TCO) for PCs and PC servers is comprised of:

  • Hardware/Software Purchase
  • Hardware/Software Deployment
  • User Training
  • Warranty
  • Help Desk Support
  • On Site Support
  • Software Upgrades
  • Software Patch Deployment
  • Disposal Costs
  • Lost Productivity From Downtime

A paper titled "Quantifying the Total Cost of Ownership for Entry-Level and Mid-Range Server Clusters" published by TechWise Research Inc. in 2007 reveals that TCO for HP, IBM, or Sun servers is at least $8,000 per month. The largest component of TCO in their research is lost productivity from server downtime.

My own research in the SMB market reveals similar findings. TCO for a single PC is between $2,000 and up to $8,000 per year. Again, the largest component of TCO is lost revenue and productivity associated with down time. The swing is attributable to the complexity of software applications, whether data is regularly backed up, how often anti-virus gets updated, how often software is updated, the type of support (7×24x365 help desk vs. adhoc) in place, and the level of training in place for end users and support personnel.

These estimates don't include the risk associated with lost data. As mobility of PC users increases, risk of lost/stolen data rises.

Enter cloud computing. The concept is simple - instead of building infrastructure with servers and PCs and software on those machines, you pay for the applications you need as a "service" on a user by user basis. You connect to the service through a secure broadband Internet connection.

With cloud computing, a service provider owns the servers, data storage equipment, and the software applications, and rents or owns commercial data center space that houses it all. The PC connecting to the service needs only to be able to run a web browser, like Internet Explorer, or Safari. The Internet connection is secured with encryption and user name and password authentication.

Service providers charge a flat monthly fee for applications, storage and protection (backup) of data, and help desk support. The monthly fee per user ranges from $150 – $350, depending on applications that are being accessed, the amount of data storage required, and the level of end user support. A one-time start up fee per user of about $250/user gets the service running.

Why now?

Cloud computing is the result of a few factors. One of them is the increasing availability of broadband Internet access. Another factor is the advent of software, such as VMware that allows connecting servers together to create one big "virtual" machine that can support thousands of users simultaneously. A third factor is the declining cost of data storage. And lastly, there is an abundance of managed service providers with commercial data center facilities with redundant power, Internet connections, HVAC, and fire suppression capabilities.

Downside of changing

There is user training associated with the change to cloud computing, but due to the similarity with a user's current desktop, training is short-lived, i.e. if arrow keys are used to navigate through a document, a screen refreshes each time the arrow key is pressed, which can translate to slow response compared to using the slide cursor or the page up/page down keys.

The file folder architecture is often standardized, so users may have to adjust to using a different file/folder schema.

The end user's desktop background may not be customizable, i.e. the background with the family photo may be replaced with a blue background.

Frequently asked questions include "What happens if I lose my Internet connection?" This can be addressed with a redundant connection. If DSL is being used, cable or a second DSL connection for Internet access redundancy is desirable. "How secure is my data?" is also commonly heard; this is a valid concern and merits rigorous discussion with the service provider to uncover whether their security policies and practices adequately protect data. However, it's been my experience that a service provider can typically protect data better than SMB customers themselves.

Benefits of changing

The benefits of cloud computing architecture vs. building internal infrastructure include:

Predictable IT Budget - Cloud computing costs are finite. There is nothing to purchase above and beyond the initial start up fee, the monthly fixed service fee per user, and the PC used to connect to the service.

Decreased capital expense - Cloud computing users can use a Winterm device to utilize the service. Winterm devices are essentially stripped-down PCs and are priced at $300-800 each. No PC servers or applications are needed because the application software is running in the service provider's datacenter(s). No PC software other than the operating system is needed. Note - depending on whether users will need access to applications where Internet service is not available, some applications may be needed on the user's machine, but data files are automatically backed up when the user again connects to the service.

Decreased ongoing expense - Cloud computing environments are simpler to support because the user's machine has little running on it. There are fewer problems with software conflicts, hardware problems, driver issues, etc.

Decreased risk - Data is centrally managed, backed up, and secured, so it's not susceptible to loss or corruption.

Improved mobility - Because applications are accessed via broadband Internet service, workers can be productive almost anywhere.

Improved productivity - Perhaps the biggest payoff for companies using cloud computing is that down time of PCs is significantly reduced. And down time associated with servers is virtually eliminated. Down time associated with lost data is eliminated due to the service provider's automated disk and tape backup. Service providers offer 7×24x365 help desk support, further decreasing down time.

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