Small business owners – did you know what the “textbook benefits” of cloud computing buzzed around in the past 3 years or so? That’s right – cloud computing is said to cut costs and increase productivity. While those are the case of some businesses, to some others, those are not entirely true.
Indeed, the cloud can help your small business to be more productive, as having your business functions in the cloud means that you and your team can work anywhere, anytime, using any mobile devices you want. So – stuck in traffic? No worries. Going for a vacation? You can still work if you want to (not advisable, though…)
However, when it comes to costs, there’s homework to be done by every decision maker. Can the cloud really cut costs? If so, how the cost cutting vs. cost of adoption goes? What’s the cloud computing adoption ROI (return-on-investment)?
Here is a must-read article for you: Gene Marks wrote a great piece of cloud computing adoption article on Forbes explaining – with real life proofs – that cloud computing solution is not for every business, especially when it comes to costs of cloud computing adoption.
Mr. Marks said that in all 30 small business clients he and his company have been working with in the past 6 months, despite the fact that they are interested in all the goodness of the cloud, none of them eventually adopt the cloud for one major reason: It’s not cost effective – at least in their case.
In my opinion, the fact that 30 out of 30 small businesses saying no to the cloud is something to consider seriously.
Cost comparison examples
Gene Marks, despite a big fan of cloud computing himself, made his point in the article with some hard-to-argue examples taken from his consulting with his small business clients, such as:
Example #1: Cloud platforms
A small business cloud solution for 10 users: $100/month/user, equals to $1,000/month or $12,000/year. A Dell PowerEdge T410 server costs $4,000 plus $4,000 in maintenance visits, totaled $8,000/year. The cloud is $4,000/year more expensive. More comparison: Amazon EC2 costs a 10-user small business $5,000/year (server-only costs – apps and such, you’re on your own.)
Example #2: CRM solutions
Let’s consider CRM (Customer Relationship Management.) For a 10-user system with a typical CRM system lifespan of 5 years, Salesforce (THE cloud CRM) would cost you $36,000/5 years, Microsoft Dynamics CMR would cost you $26,400/5 years and ZohoCRM would cost you $15,000/5 years.
Non-cloud CRM software, such as ACT!, GoldMine and SalesLogix, would cost about $10,000-$15,000, and that’s one-time cost. Annual maintenance could cost a small business 20 percent of the software price tags, but it’s optional as small businesses can source for much cheaper alternatives.
Example #3: Accounting solutions
Cloud-hosted ERP/accounting solutions, such as NetSuite and Intacct, would cost you $10,000-$20,000/year. On-premise accounting software only cost you one-time fee… QuickBooks Enterprise is priced at $3,500/one-time, while Microsoft Dynamics GP or Sages’ MAS 200 are tagged at about $20,000/one-time.
Well, as you can see from the examples above, the cloud is costly. So, be sure to do your due diligence, especially in cost analysis. Don’t be faltered by the pitch of cloud vendors. Indeed, the cloud is powerful and all, but it’s clearly not for every business. Make sure that you will make a well-informed decision.
Sure, just like with any other software and hardware solutions, cloud computing costs will go down, eventually. But at the moment, the cloud may still be out of reach for small businesses in term of costs of adoption. We do know that in small business, keeping costs low is a priority; so, again, be sure you adopt the cloud at the right time.
If you decide to wait until the cloud is becoming more affordable, be sure to devise a plan that accommodate cloud computing adoption when the opportunity arises, while ensuring business continuity in the process.