Smaller Firms May Have More To Gain From The Cloud

The cloud is often thought of as a strategy for large organisations, but medium size companies have a lot to gain from it, too. The interesting thing is, the two types of business come at the idea from very different directions.

Large organisations tend to be stuck in their ways, and require a lot of planning and development before they can deliver anything new to end users. They go to the cloud – and often it is end users routing round the IT department – to get things quicker and more flexibly.

Medium sized companies are normally more agile to start with. They go to the cloud because that is where they can buy the same sort of IT that their larger neighbours have – only they can buy it by the slice.

So, a classic cloud solution like Salesforce CRM is one product doing two different things for different size companies. At least, that’s the message I got from a webcast I chaired last month.

Levelling the playing field

“The cloud gives [smaller businesses] access to business suites of software that would have been beyond their reach,” said John Easton, CTO for IBM’s systems and technology group in the UK and Ireland.

The other panel member, Len Padilla of NTT Europe, agreed, but warned that the cloud is not a panacea: “I wouldn’t pretend that the cloud will solve all [smaller companies’] problems,” he said.

Other cloud benefits came in for an airing, such as the ability to scale software buying licences as needed, to rapidly prototype services in something like a real environment, and to deal with different sources of data.

That was all very cosy, but we we were brought up short by the results of our online polls as we presented. Security in the cloud has been dealt with many times in the past, but it is clearly still a major sticking point in our readers’ minds, topping a quick poll on what is the major barrier to using the cloud moving to the cloud.

“If you are talking about security as an inhibitor now, then you are using it as an excuse,” said Easton. To all our surprise, security beat out other more intractable cloud problems, such as network throughput and reliability.

Forced into it?

What’s the answer to that impasse? Well it might just be desperation. Padilla pointed out that companies are cutting costs by having smaller IT teams. Even if they don’t have the cloud in mind when they do that, they may just find that when they want new services implemented, the cloud is simply the only way to build them with the in-house skills they have.

That might sound a bit grim, but that could be the way of the new cloud world, where things will get tried quickly , and junked quickly if they don’t work: “It is important for companies to be able to kill things when they are not working,” said Padilla. “By reducing the amount of sunk cost, the cloud makes it easier to cancel something and move to something better.”

The move will also force customers to decide just where they want to build things to their own specifications. The cloud moves companies from a highly bespoke to a highly customised environment which, Padilla said, “forces customers to decide where they add value.”

That then gets them into the world where they realise that cloud is an enabler of flexible systems – instead of the cost-cutting option they may have been expecting at first, said Easton.

Smaller firms have a bigger opportunity to push larger chunks of their back office infrastructure into the cloud. They could easily do more with  it than the larger organisations, said Easton. “Some of the interesting commercial models that cloud bring with them are not yet easily consumable by large organisations. It has proven hard for large enterprises to consume pay-as-you=go models.”

In the end, although larger organisations may jump into the cloud first, smaller businesses may actually jump further.

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