Businesses Bucking Cloud Computing

I just returned from holidays with my family and am spending hours catching up on my blog reading. The advantages to reading so much, so quickly, is that articles separated by time and distance take on new meaning when compared together. This happened when I read about the Gmail failure and this article on a survey of Small and Medium Business (SMB) use of cloud-based services.

The survey begs the question, “Why are SMBs not rushing to use cloud-based services?”   This got me to thinking about our own experience at WeoGeo with cloud-based content management services, as well as our discussions with hundreds of SMB customers. I think I can break this down into 3 key points.

1. Compartmentalization – The top cloud-services used in the survey are conceptually simple to understand and compartmentalize from an IT and business perspective. These web-hosting (#1 in the survey), email (#2), and data archival (#3) services can be broken apart from the daily operations of any business unit and provided back to that business unit as a service, either internally by an in-house IT operation, or externally from a service provider, i.e. Google Mail. The workflow within a business unit is not impacted by the internal or external delivery of these services.
2. Uptime and bandwidth – These services require a high degree of availability, whose functionality can be felt by every single person in the organization. Ask an IT manager what makes their cell phone ring more – the downtime of a processing computer, or the downtime of the email server. In addition, the internal IT solution downtime can be measured and compared easily against the performance metrics of external “cloud” vendors. Prior to the GMail failure of 100 minutes this past week, Google was apparently averaging 10-15 minutes per month. That is better than most in-house operations.
3. Cost can be measured and is favorable for the use case – When we switched from our own Microsoft Exchange Mail Server to Google Mail Premium, the cost savings was enormous. We estimated our all-in costs on the Exchange Server at ~$30,000 per year for 15 employees, including IT staff, outside contractors, data center charges, storage and archival expenses, and spam filters. $2,000 per employee per year. Google Mail Premium is $50 per email box per year. The math is pretty simple.

What about the other Infrastructure-, Platform-, and Software-as-a-Service products? My own thoughts are that outside of the tech industry, these other services do not appear to be as easily compartmentalized within an organization. Most business applications seem to run on workstations or internal services quite fine, and the downtime of those processing units just don’t seem to resonant with the IT and business leaders of an organization. In addition, the “simple math” of extreme costs savings (a la Google Mail) of moving more complicated operations to cloud services has yet to be definitely proven.

There are other concerns like the security and integrity of production or sensitive data that also have slowed the uptake of these services within the SMB community. However, I think that providing compelling solutions to business problems that can be (1) compartmentalized and (2) provide a high degree of availability at (3) a dramatically lower total cost of ownership will help allay those concerns. Make this case, and the greater adoption of cloud services by SMBs will be assured.