Why the cloud is great for small business.

There is an "old saw" known to technology professionals as Moore's Law, which postulates that the capability of computing technology will roughly double every 12 to 18 months.  The phenomenon, described by Gordon Moore, co-founder of Intel in 1965 and has largely held true for half a century!

So why, with the spectacular advance in technology, do information systems remain such a headache and cost so much?

Here is why and some good news for small businesses.

A sea change in how information technology is sold

For over half a century information technology companies have been selling boxes. Computers, routers and software all came in a package.  In order to maintain growth, manufactures needed to find new markets and ensure obsolescence to encourage additional sales to existing customers.  Sales to existing customers is known in this industry as "churn".

Dependence on churn puts the interests of the technology provider at odds with the customer.  The model can not last forever.

So how can technology providers continue to grow?

One way is to rent processing time on computers rather than selling boxes.

This single change in the business model is the essence of cloud computing.  It is having a profound effect on the industry.  And, is a tremendous opportunity for small businesses.

Why Cloud Computing is good for technology providers

In the old model, manufacturers made money selling boxes for a profit.  As costs came down, the margins shrank and growth depended on selling even more boxes.  In the new model, the revenue stream does not dry up after a sale.  Once a system is deployed it generates a cash stream from then on.

Also, by marketing multiple data services, technology providers can sell computing capability to many markets, all sharing a common platform.

Why Cloud Computing is great for medium and small businesses

No capital investment - Cloud computing allows businesses to purchase the capacity they need as they need it.

Scale - It is relatively easy to increase capacity to accommodate growth or peak load and decrease capacity, and expense, when things are slow.

Usability -  Servers and network are expensive for small companies to deploy and maintain.  In the cloud services model performance, reliability, information security, back-ups and privacy are the technology vendor's responsibility.

Targeted Use - Business no longer need to purchase equipment and associated staff to utilize a new system.  Often, the service is available "in the cloud", easily implemented, less expensive and more reliably than hosted on premises.

Administration - Where businesses needed to hire a growing array to technical experts to manager in-house computing environments, technology providers now provide much of the administrative support.

Summary

Cloud computing will be a boon to medium and small businesses.  

In the cloud paradigm, the interests of providers and consumer more closely align.  Hardware improvements and software efficiency now increase margins instead of reducing churn.  Providers have an incentive to make systems run efficiently and to offer more and better products available to customers.

We are also beginning to see exciting, inexpensive services that promote interoperability between systems.  Software services that used to be captive in their own silos can share data and work together.  And, new tools are available that hyper-charge programmer productivity.

How to catch the wave

Innovation in information technology is rushing past like a storm tide.  The trends are difficult to track, even for technology professionals.  Medium and small business owners have little chance of taking advantage of these trends without expert guidance.

Complete System Design, Inc. was created to help enhance medium and small companies with technology and take full advantage of Moore' Law to.

Call today.