‘Cloud Computing’: What Exactly Is It, Anyway?
For a lot of small-business owners, “cloud computing” is the latest IT buzzword to leave them scratching their heads. To demystify things, here’s a primer for companies looking to wade into cloud services for the first time.
What are cloud services?
The Journal Report
See the complete Small Business report .
Broadly speaking, any service or program sent over an Internet connection can be considered a cloud service. An outside vendor runs the servers and software, so the buyer doesn’t have to worry about the technical issues in-house—and can focus on its own business.
The services come in a number of forms. Many businesses are already familiar with one aspect of cloud computing: software delivered over the Web. Along with email services like Google Inc.’s Gmail, there are programs that help salespeople keep track of customer information, such as Salesforce.com Inc.’s software, and backup data-storage services from providers such as Amazon.com Inc.
Some businesses don’t just use software services, they buy computing power from vendors such as Verizon Communications Inc.—much like buying power from a utility. Let’s say a retailer expects lots of additional business during the holidays, and its in-house servers can’t handle the load of customer orders. The company might pay a vendor for the use of its servers, to shoulder part of the computing work as the need arises.
Other companies, meanwhile, might buy computing power on a regular basis. They might drop one or more in-house servers entirely—or not buy the hardware in the first place—and let a vendor run their vital programs on its machines. Once again, the buyer would pay a fee based on how much computing power it used.
How much will they cost?
Unlike traditional applications, which require hardware such as servers and IT staff for maintenance, cloud services don’t carry many upfront costs.
A Cloudy Outlook
- About 3.2% of U.S. small businesses, or about 230,000 businesses, use cloud services.
- Another 3.6%, or 260,000, plan to add cloud services in the next 12 months.
- Small-business spending on cloud services will increase by 36.2% in 2010 over a year ago, to $2.4 billion from $1.7 billion.
Source: IDC
Consider software. Salesforce.com’s offering for businesses costs between $5 and $25 per user each month. Google offers a host of programs including email, a word processor, video and a hosted Web site for an annual fee of $50 per user. For small businesses that have more-extensive computing needs, such as drug laboratories with extensive software, cloud services could cost more than $1,000 a month.
As for buying computing power, some providers charge for a certain amount of memory and computing configuration. Terremark Worldwide Inc., for example, charges six cents an hour for one gigabyte of RAM and the equivalent of one processor.
One caveat that might bump up costs a bit: If you’re going to rely on the Internet for your services, you will need a solid connection. While some believe a business-class DSL connection is sufficient, many industry observers and consultants recommend getting a faster line, such as a T1.
Continue Reading at WSJ
