Cloud Computing: A Starter’s Guide for Small Businesses

Cloud computing allows your small business to access software apps and IT resources such as servers and storage over the internet. The resources are hosted online and managed by the cloud provider—meaning you don’t have to purchase, install, and maintain expensive or bulky physical equipment in-house. All you need is an internet connection.

This guide covers everything about cloud computing for small-business owners like you. We explain how on-demand access to cloud computing resources helps streamline your IT operations as well as include advice from a small-business owner who's leveraged the cloud.

Cloud computing is an IT service delivery model that offers your small business on-demand access to computing resources such as software applications, storage, and servers via the internet. You can use as little or as much of the resources as you want and pay for only what you use. 

These resources are hosted at a remote data center by the cloud service provider, which removes the need to install any physical IT equipment or devices at your business premises. You only pay a monthly or usage-based fee for the space you occupy and the services you use, while the vendor takes care of the upkeep and security.

The cloud computing model consists of three main components: 

• Clients: These are the devices you and your employees use to access cloud services via the internet. Examples include smartphones, laptops, and desktops. 

• Data center: Cloud data centers are secure facilities where cloud vendors store their IT infrastructure and resources. These centers contain networking, computing, and storage infrastructure the service provider uses to host and deliver computing resources online. 

• Cloud delivery network: A group of data centers that work together to ensure your data is always available and accessible through clients (your devices), irrespective of where they are located.

Based on the ownership of cloud resources and storage, there are four main categories of cloud computing:

1. Public cloud

Public cloud refers to the shared use of cloud computing resources, viz. applications and storage, by multiple parties. Since the resources are shared by many organizations, the cost of cloud computing comes down drastically, making it affordable for SMBs.

It’s like renting storage space in a big facility along with other businesses. You only pay for the space you use, and the company running the facility takes care of security and maintenance. 

2. Private cloud

Private cloud gives you exclusive access to the computing resources you want. It’s like a personal storage unit dedicated just to your business. While it might cost more than sharing space in a public facility, you have more control and security.

Private cloud comes in three different versions:

• Virtual private cloud (VPC): The cheapest option wherein resources from the public cloud are made accessible only to you by the service provider. 

• Hosted public cloud (HPC): More expensive than VPC as the service provider takes you out of the public cloud and creates and manages a private cloud specifically for your business. 

• Private cloud (PC): The costliest option where the service provider creates an internal cloud infrastructure dedicated to your business by building your own data center.

3. Hybrid cloud

As the name suggests, hybrid cloud computing is a combination of private and public cloud computing. This version is suitable if you want to meet fluctuating workloads (with public cloud) and also ensure the security of sensitive business data (private cloud).

For instance, you can use the private cloud to run your website, and when there are traffic spikes, you can quickly access public cloud resources to handle the surge. Likewise, you can store critical information (financial and client data) in the private cloud and host everyday applications on the public cloud. This way, you get the best of both worlds—the control and privacy of a private cloud, and the cost savings and flexibility of a public cloud. 

4. Community cloud

Community cloud is similar to a public cloud, in the sense that one or more companies share the resources. The difference is that access to the community cloud is limited to a few companies that have similar requirements, such as banks or trading firms. The companies can come together to create a cloud infrastructure or use the services of a cloud provider.

Cloud computing is essentially a service, and there are different types of service models you can choose from. Below, we discuss the three most commonly used cloud service models: Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS). 

• SaaS: A cloud software delivery model where you pay the SaaS vendor for using their applications. The software apps are delivered to you via the internet and can be accessed using a web browser or client application. Unlike on-premise software, you don’t have to install or store the apps on your computer. Some common examples of SaaS are productivity tools such as email management software and video conferencing software. (For more information on SaaS, click here.)

• PaaS: A cloud software delivery model where you pay the PaaS vendor for using their software development environment and tools. If you’re a software developer, you can use PaaS to build applications. The vendor provides you the development environment, while you only have to manage your data and the application you’re building. Some common examples of PaaS include Force.com, Google App Engine, and Heroku. 

• IaaS: A cloud infrastructure delivery model where you pay the IaaS vendor for using their cloud data storage, virtualization, servers, and networks. In this model, you manage your applications, data, and middleware, while the vendor provides the IT infrastructure. Some examples of IaaS are DigitalOcean, Amazon Web Services (AWS), and Microsoft Azure.

Let's delve into the benefits of migrating your business to the cloud. 

Improve cost savings

Migrating to the cloud can unlock significant cost savings for your IT operations. You can leverage cloud computing services to reduce expenses related to hardware purchases, maintenance, and software updates. According to a GetApp study*, 34% of IT professionals in small businesses are moving more IT resources to the cloud, to offset the rising costs of IT hardware.

Minimize operational burden

Transitioning to the cloud can ease the operational burden of installing, maintaining, and updating on-premise IT infrastructure. Your cloud service provider will take care of hardware upgrades, security management, data backup, and disaster recovery—tasks that would otherwise consume significant time and investment for your small business. 

Boost innovation and ROI

Migrating to the cloud would free up IT resources tied to maintaining in-house infrastructure, allowing them to focus on revenue-boosting initiatives such as new product development or market expansion. This is one of the reasons 51.1% of small businesses consider cloud computing critical for running their business**. 

While cloud migration offers significant benefits for your small business, it's also essential to be aware of potential concerns before making the move.

• Be mindful of cybersecurity threats. Cloud services are generally secure, but no system is completely immune to data breaches or hacks. The shared nature of public cloud resources, for instance, makes them an attractive target for cybercriminals. You can minimize these risks by partnering with a cloud computing provider that has robust security measures in place. It’s equally important to train your employees on safe online practices and implement strong access controls to further protect your cloud data.

• Evaluate vendor reliability and support. Not all cloud service providers are equal. Therefore, factors such as service uptime and migration support vary significantly between vendors. Before committing to any provider, research their offerings and read customer reviews to get a sense of their service performance. To ensure a smooth cloud transition, choose a vendor with a strong track record of reliable service uptime and robust migration support. 

• Tackle data migration hassles. Data migration can be a complex and time-consuming process. Ease the transition by planning your migration in stages. Start by identifying critical data and applications to move first. Also, be prepared for potential hiccups, and have backup plans in place to minimize downtime and disruption.

The benefits of cloud computing go beyond cost savings, enabling your small business to accomplish much more and streamline daily operations. However, before jumping into cloud migration, heed the advice of Doug Van Soest, the co-founder of SoCal Home Buyers, a real estate company that helps homeowners sell their properties quickly [1]:

“I’ve seen businesses eagerly transition from outdated legacy infrastructure to the cloud to reap its transformative benefits. We, too, made the move for up-to-date, real-time performance and security advantages. But during the process, we discovered the importance of a tailored migration strategy that fits our organization's needs. 

My advice is to stay grounded and avoid acting prematurely. Engage a cloud migration partner as, without an appropriate strategy, you risk overspending your limited IT budget on the wrong tools and services.”

Doug Van Soest, Co-founder of SoCal Home Buyers