About a decade ago, big technology companies started talking about a new paradigm for the way information technology (IT) services would be provided in the future. The model they envisioned was often compared to the way utilities transact business with their customers. When you buy electricity, for example, you pay just for the amount you use, and as your business grows and you need more, it’s available on demand. The bulk of the underlying infrastructure--generating plants, transmission facilities, feeder cables--is owned and maintained by the electric company. Of course, the utility passes along those infrastructure costs, but because they are split among so many customers, the cost to any individual customer is minimal. 

That, in a nutshell, is the basic premise behind cloud computing. Up until the emergence of the cloud, any organization that needed computing power basically had to go into the business of being its own IT provider. It was an expensive proposition, requiring the purchase of significant amounts of hardware (servers, workstations, monitors, cabling, networking devices, etc.), software (custom-created, off-the-shelf, or licensed), and skilled personnel to set it up, keep it running, troubleshoot problems, and keep everything up to date. Often, it made little financial sense because the IT applications being supported were used infrequently, so a significant capital investment was left sitting idle much of the time. 

The cloud virtually erases the bulk of those drawbacks. It offers businesses the ability to reduce operational and capital IT costs for applications and services they would otherwise have to purchase and maintain, explains Subo Guha, vice president of product management and marketing at Unitrends, a provider of data backup and disaster recovery solutions. “It also scales easily to meet the demands of business growth and can be accessed from anywhere, anytime.” Tapping into cloud computing and the new virtualization technologies it supports gives companies the flexibility they need to scale their business while reducing operations and management burdens, he adds. 

Brian MacFee, president of Systems Support Corporation, a provider of IT solutions and support to small and mid-sized businesses, points out that risks due to outages, security threats, and environmental disaster are “enormous” for companies relying on internal infrastructure. “Businesses need a place that is more secure than their premises--secure from broken equipment, lost data, hackers, storms, and power outages. Cloud configuration shifts those problems to cloud solution providers, who are invested heavily in the technologies to overcome them,” he says. “Through economies of scale and automation, they can provide those solutions at a cost companies can afford.” 

With cloud computing, your information is stored on servers located at data centers maintained by cloud services providers rather than on computers on your own premises, and it is always accessible via a real-time virtual connection. “With the cloud, businesses have almost unlimited storage,” says Peter Long, CEO of Lockbox, a provider of document sharing and collaboration services. “They can also access their information from anywhere with cloud storage, bypassing geographical or time zone boundaries, and hosting facilities manage server speed to make sure information is delivered quickly.” 

Applications are stored in the cloud in much the same manner as they would be on physical servers in your own data center. “Virtual machines created in the cloud are connected with administrative access,” explains Peter Johnson, senior director of cloud platform evangelism at ProfitBricks, a provider of virtual data centers and other cloud computing services. “Your system administrators have the same powers in the cloud that they’re used to having in your physical data centers.” Users generally access cloud-hosted applications via a Web browser by entering password credentials. Updates and upgrades to applications are done system-wide at the hosting site rather than on an individual-user basis. 

Owners of small and mid-sized businesses thinking about moving some or all of their IT operations to the cloud should research and consider the following points: 

• The cost of onsite IT versus cloud-hosted solutions. 
• Security considerations to safeguard customer data, applications, and critical business information. 
• The strength of the data protection and disaster recovery model. 
• The physical location of the cloud provider’s servers. Some businesses have financial or security requirements that prohibit certain data from being stored outside their state or country. 
• Whether to use public cloud, private cloud, or hybrid cloud (combining elements of the first two) solutions to best meet your needs. 
• Service level agreements (SLAs) detailing performance, speed, and availability metrics. 

“Cloud is a fast-growing technology that will increase in adoption among small and mid-sized businesses,” Guha predicts. “They have less incentive to own and manage IT and a far greater need to devote the bulk of their time and energy to the business at hand.” The combination of fast, reliable performance and data and application security that cloud computing provides will make it an irresistible choice for more and more growing businesses, he adds.