SMBs move cautiously into the cloud

Not quite half of Canada’s small and medium businesses are – at least knowingly – using cloud computing today. Of those that are, about two-thirds use software as a service products like Salesforce.com and Google Apps. The less familiar concepts of infrastructure, platform and hardware as a service have penetrated only five to 15 per cent of SMBs so far.

Those figures come from ITBusiness.ca’s e-mail survey of Canadian SMBs, completed by about 300 businesses across the country in September. About 56 per cent of respondents said they had used no cloud technology this year, 36 per cent reported using software as a service, just under 15 per cent infrastructure as a service (AppEngine, VMWare, etc.), about nine per cent platform as a service (like Amazon Web Services or Microsoft’s Windows Azure platform) and about eight per cent hardware as a service, meaning they had hardware managed remotely by a managed service provider.

These figures may understate the impact of cloud computing on SMBs, because not everyone understands the terms or realizes when they are using cloud services, suggests Stuart Crawford, president and chief operating officer of Ulistic Inc., and a member of ITBusiness.ca’s editorial advisory board.

Carmi Levy, an independent IT consultant in London, Ont., says he knows of a local public relations firm that uses Evernote – a note-taking application whose online component allows access from multiple devices – extensively, yet “if you ask them if they’ve committed to the cloud they’ll say no.”

Whether or not a business is consciously pursuing cloud technology, Levy observes, “chances are it’s already affecting your business life.”

And that’s probably good for smaller businesses, he says, because the cloud can offer them capabilities they would find hard to provide in-house. “What SaaS and cloud-based services are doing is they’re levelling the playing field, because now they’re taking away the need to bring in big-iron infrastructure.”

There could also be small businesses using platform as a service offerings without recognizing them as such, Crawford says – for instance, running SQL Server on Azure. But, says Andrew Muroff, chief information officer at Premier Salons Inc., a Toronto-based salon and spa operator that uses Google Apps throughout its North America-wide operations, software as a service is the most comfortable form of cloud computing for SMBs today. “Those are the things people can dive into with relatively little risk.”

Muroff, who says he has been a champion of cloud computing since his time at Toronto-based 80/20 Solutions Inc. – which offers a hosted marketing automation system – says Google Apps saves Premier $300,000 to $400,000 a year on software licensing and speeds up some operations.

When the survey asked SMBs what concerns they have about adopting cloud services, one issue came out well ahead. About 35 per cent of respondents named security risks as their biggest concern.
Crawford says he can understand business owners being concerned about the security of data in the cloud, but believes that today, the cloud might well be securest place SMBs can choose to put their data.
“Data in the cloud at a reputable organization is more secure than sitting in your office,” he says.

“Who has more money to spend on security?” Muroff asks. “Google, or me?”

Tom Moss, director of products and services for security software vendor Trend Micro Canada in Toronto, says SMBs considering cloud services do need to ask some questions. Software as a service providers should have service-level agreements that include provisions for security. “Small businesses can make an assessment,” he says – “do I feel secure given what is there?”

With infrastructure as a service, he says, the service provider still controls the platform and “you’re pretty much going to have to live with whatever security controls they provide,” so it’s also important to understand what the provider will do for you. With platform as a service, “there is no SLA for security” and the responsibility falls mainly on the SMB.

Businesses using any sort of hosting should consider encrypting data in case it gets left behind when they move off a provider’s systems, Moss adds, as providers’ procedures for getting rid of such data may not always be foolproof.

After security, costs and pricing structure was the next biggest concern about moving to the cloud, named by around 26 per cent of survey respondents. Ownership and access of data came in at around 18 per cent and data sovereignty concerns about information being stored outside of Canada was the top worry for about 17 per cent. The “other” category accounted for the balance.

Crawford says cloud computing is sometimes seen as more expensive than the traditional licence model, analogous to renting property being more costly than buying in the long term. But it’s not necessarily so when you consider immediate access to upgrades at no added cost, not to mention the possible tax advantages of operating expense versus capital cost. And cloud solutions help businesses stay current with the latest technology, he says.

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