July 3, 2014 | Written by: John C. Mason
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Cloud computing’s arrival has been transformative for all kinds of businesses. But when this chapter of business history is written, it seems likely that our smallest enterprises will be the ones most transformed by the cloud. These are the companies that range from two guys in a garage, to a mom and pop operation, to any one of the many small firms with 100 or fewer employees who represent a whopping 99.7 percent of US employer firms and similar percentages around the globe. For this segment, cloud computing has been downright liberating.
Small businesses need to do more with less, and that’s one of the major appeals of cloud computing. It’s on-demand, flexible to demand spikes, always available, and requires almost no setup or capital expense. Services can scale up (or down) as companies need them, and they can be consumed at price points that don’t kill a fledgling company’s cash-strapped budget. Likewise, small businesses face tough choices about where to deploy that crucial next headcount, and many are finding that cloud helps them focus it on their real value add, not just getting their IT infrastructure in place and managing it. Because of these factors, cloud is being embraced at record rates by smaller companies. According to the latest study of small and mid-sized businesses by SMB Group, 92 percent are now using at least one cloud business solution.
But cloud computing is not just preserving capital—it is freeing small businesses to drive results sooner, better innovate and compete on a global scale.
Democratizing the IT purchase decision
One way that cloud computing is changing small businesses is the way it’s “democratizing” the IT purchase decision. Its ease of acquisition is moving the purchase decision out of the IT department and on to the office or warehouse floor. The new decision maker might be the VP of marketing or sales, the person running customer service—even the head of the company. In fact, a recent Gartner study predicted that by 2017, CMOs will outspend CIOs on IT. Today this line of business (LOB) decision maker is able to go directly from research to purchasing and using cloud solutions with little or no expert help. They look up information and reviews online and often sign up for a free trial without ever speaking to the solution vendor, or even their company’s own IT expert.
Cloud solution providers are making it easier than ever to discover, try, buy and integrate with existing systems. It’s amazing when you consider that an entrepreneur with little technology knowledge can sign up for cloud-based solutions like social collaboration tools or marketing campaign management services in little more time than I would spend online checking World Cup soccer results.
This is a huge departure from our pre-Cloud Revolution days. Just a couple of years ago, small businesses were constrained by the need for an IT expert who would spend time understanding their functional requirements and then translating those into a solution. It was accepted that technology purchases required specialized knowledge because the consumerization of IT—employees’ expectation that the user experience with a business application or service should be as simple and intuitive as the one your smartphone gives you—had not yet become pervasive.
Today, companies are shifting the focus of their IT investments. Historically they were mostly looking for efficiencies in their back-end systems of record, installing ERP systems and the like along with the requisite IT infrastructure. Now, they are laser focused on revenue growth and improvements in customer engagement. Today, cloud is helping LOB decision makers find new customers. Big data and analytics tools are helping them address those customers’ needs with more targeted offerings.
Liberating for the IT department, too
The rise of cloud computing and the sharing of solution decision-making can be freeing for the IT department, too. There is often pent-up frustration within IT because of the time spent keeping back-office systems running and old versions updated. Cloud solutions that replace legacy technology free up valuable IT time that can be spent on priorities that really matter to a growing business, like geographic expansion or customer acquisition.
But not all cloud decisions can or should be made without IT involvement. When companies need to tie in back-end systems of record, such as pricing databases, customer records etc., IT has a key role to play. Likewise, security concerns need to be addressed. Local partners also play a critical role here in supporting IT, providing advice, integration capabilities and cross-vendor solutions and support.
Finding the right balance between the business decisions that need to involve IT and those that don’t allows the IT department to help their LOB stakeholders get more value out these systems of engagement and drive to results faster. Communication between IT and LOB becomes even more critical for success here.
Better, faster innovation—a lesson from Krakow
There is another transformation driven by cloud computing that is really crucial for small companies. It levels the playing field for innovation and can help them expand beyond geographic borders.
I was recently in Poland meeting with clients and business partners. One of these is a data analytics partner who runs a small business supporting clients in and around Krakow. One of the principles saw an opportunity to think beyond borders when he decided to upgrade an outdated internal system for optimizing margins on special bid pricing situations. Working with just one colleague, in a few short months he redesigned the system to run on SoftLayer and will make it available as a cloud service to customers from China to India and the U.S. The new service will soon be deployed globally and will empower the company to reach hundreds of thousands of potential customers. A great example of cloud unleashing the freedom to innovate and grow globally for a small business who thinks big.