Effect of cloud computing on Small business

Cloud Computing is a definite boon for the SMEs. This technology has certain direct benefits on the TCOs by directly brining down the costs. There are also indirect effects which may not be directly quantifiable by do affect the TCOs.

Sharing of burden

The vendors manage the whole IT infrastructure of all their customers through a single instance of the software; therefore they can spread the cost involved among all their customers. This reduces the burden on every individual customer there by yields substantial benefit to every customer. The vendor charge the customers through a subscription based model where in the customers pay per use. This effectively brings down the total cost of ownership (TCO).

Eliminate Capital Cost

It makes absolute business sense to go for cloud computing for SMEs as most of the IT activities can be outsourced.  Usually, most business spend a lot of their capital on technology: survey and deciding on the technological requirements, procurement, implementation and maintenance Cost involved in setting up and maintaining the whole IT set up including the servers, backup, software, operating systems, databases, updates, migration, power and cooling, facility space, etc., and associated internal and third-party staffing will be borne by the vendor. So, the SMEs do not need to incur the huge capital costs towards setting up the IT infrastructure. For example: migrating to cloud saves on purchasing cost of the license for software for all the employees. Thus, the SMEs can save on the proprietary license cost and maintenance of IT infrastructure in future too.  . They get to save hugely by eliminating all these activities and entrusting the responsibility to a third party vendor. Instead they can concentrate their efforts on their bottom-line and without tying down their resource to non-monetarily beneficial activity.

 Operational efficiency

SMEs need up to state of art set up like their larger counter parts to run their operations. But they are constrained by the manpower availability and budget. As they cannot afford to have grand infrastructure and huge fleet of staff like the larger companies they choose to operate on a smaller scale. With cloud technology the SMES can enjoy the same class of setup services as the larger enterprises with lesser cost and lower man power. Now they can also have more mobile workforce, access to real time information, anytime and from any where. Also, they could venture into territories which were a no go area for them due to non-availability of infrastructure and staff. Thus bring in more business without incurring additional expenses
Close to Zero maintenance cost

The applications on the cloud can be accessed through a very thin client like a web browser. So, business need not procure high end machines to carry on their operational activities. They need to own very basic no frills machines with which are capable of accessing internet. They are sufficient to run cloud based applications. As the IT set up is least complicated, the cost involved in maintaining these systems is low as well.

Therefore, switching over to cloud computing would be a perfect move for the SMEs to save on cost lower the TCOs.

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