Reducing the fog – Q&A

Is there a simple way to explain cloud computing, without the jargon?

At the beginning of the 20th century, businesses needed to generate their own electricity, in-house. Businesses had their own generators and maintenance staff, which were expensive and required specialist skills. The advent of electricity distribution networks enabled businesses to pay only for what they needed from power stations. This transformation increased productivity around the world.

Using the ‘cloud’, services are delivered through the internet, rather than on a local computer.

Broadband is causing a similar transformation. Previously, businesses would need to manage internet and communications technology (ICT) themselves through buying, building, installing and operating hardware and software, which would often be expensive and require a specialist. The availability of broadband has brought about a number of cloud services, which offer hardware and software solutions delivered over the internet on a pay-as-you-go basis.

As with electricity, businesses only pay for what they need. For example, a business can use online accounting software for a small monthly fee, rather than buying, installing and maintaining an accounting software package onto desktop computers. The term ‘cloud’ refers to the internet – services are delivered through the internet, rather than on a local computer.

There are all sorts of cloud services on offer – from accountancy to customer-relationship management, all the way through to purchasing raw processing power. These services can be accessed on the go, when you need them, whether that’s in the field talking to customers, at home or back in the office.

Is cloud computing just another way of outsourcing?

Yes. The advantage of cloud is that providers have large economies of scale and deliver standardised applications and services.

This can translate into lower costs, better expertise and better security and back-up.

Why should businesses consider cloud computing?

Here are three reasons why:

1. Mobility: One advantage of the cloud is that it can be accessed through any device with an internet connection – that includes smartphones and tablets. This means more flexibility and convenience, a more agile workforce and better flows of information throughout the business. Cloud, equally, may provide you with a platform to reach your customers through their mobile devices.

2. Productivity: Cloud service providers take care of what they are good at – ICT, support and computer security – so that you can focus on what you are good at – your business.

3. Pay as you go: Pay-as-you-go pricing allows you to experiment with a service and swap out if it is not what you want. This can make your business more agile and innovative, and scaling up and down when you need to can reduce your costs.

How much can businesses benefit from cloud computing?

An emerging body of research suggests that business that use cloud services tend to be more productive, experience faster revenue growth and innovate more.

For example, a 2013 MYOB survey of Australian small businesses reported that businesses using cloud services were 106% more likely to see a revenue rise in the past year than businesses not using cloud services.’1

Similarly, a 2012 survey by the European Commission found that as a result of adopting cloud computing, 80% of organisations cut their ICT costs by 10% to 20%; 41% of organisations reported productivity benefits and 33% reported new business opportunities as a result of adopting cloud computing. These huge percentages mean there could be a lot to gain from using cloud services.’2

Is cloud computing secure?

Asking whether cloud is secure may not be the right question – a better question might be ‘how do the security benefits and risks of cloud services compare to the alternatives?’. For example, if your computer servers are on-site, you need to evaluate risks such as burglary. If you store your data through a cloud provider, you need to assess what measures the provider has in place to prevent unauthorised access.

Cloud service providers often have more resources and security expertise than the average small business. For example, you could get access to the latest upgrades and security tools, plus back-up data across multiple sites. This means that your business can be more resilient to some of the things you can’t control, such as flooding.

Ultimately this is your business decision, so talk to prospective cloud service providers about the security they have in place.

Digital Business team, Australian Government Department of Communications

Visit www.digitalbusiness.gov.au to watch a video on how Chippendale Child Care Centre is using cloud services to improve its operations for staff and customers.

Digital Business is an Australian Government resource for small businesses and community organisations about marketing and managing business online.

1 MYOB Business Monitor, http://myob.com.au/myob/backing-aussie-business/myob-business-monitor-1258090877325, March 2013.

2 European Commission: Unleashing the Potential of Cloud Computing in Europe, http://ec.europa.eu/information_society/activities/cloudcomputing/docs/com/com_cloud.pdf, September 2012.