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Cloud Computing: A Paradigm Shift for Small and Medium Enterprises (SMEs)

 Feb 09 2010    Posted by: admin   Posted in Technology Outsourcing

Cloud Computing has been generating a lot of buzz lately. The topic has been appearing more and more frequently in technology magazines, blogs, and big technology outfits like IBM, HP, Microsoft, Google, and Amazon have all setup offerings to capitalize on the growing acceptance of Cloud based services. The term Cloud Computing does not refer to one particular service; rather it encompasses collection of offerings that provide customers with an option to rent these services as opposed to spending large amount of capital to buy them upfront. While this subscription or rent based model appeals to enterprises of all sizes, it’s the Small and Medium Size Enterprises (SMEs) that stand to benefit the most from this paradigm shift. With no startup capital required, the SMEs can quickly ramp up their computing capacity, try out new enterprise applications in areas such as Customer Relationship Management (CRM), Business Intelligence (BI), or experiment with renting entire software development platforms to build and host their own customized applications.

Flexible Infrastructure

Research shows that enterprises waste a significant percentage of their physical computing capacity. The initial planning often results in procurement of hardware to anticipate the future growth in usage which, more often than not, does not materialize. This disconnect between computing capacity and the actual requirement is not limited to larger organizations. SMEs also face a difficult choice of either procuring expensive dedicated hosting solutions or, if they cannot afford that, resorting to cheaper shared hosting solutions that give them little control of their hosting environment. Moreover, keeping their physical computing setup in sync with their changing business requirements is a constant challenge. In most cases, improving capacity meant moving to a more powerful machine with more memory and that required migrating all the running applications causing headache and downtime. Cloud Infrastructure Services provide an ideal solution where SMEs can sign up with little or no upfront costs and they are billed on how much computing power, memory, and data transfer they have consumed. Amazon Cloud Services (EC2) is an ideal starting point for SMEs looking to explore Cloud Computing. They have wide range of services that cater, or can cater to an entrepreneurial entity to large companies looking for hundreds of virtual servers.

Software as a Service

Cloud Computing encompasses more than just flexible Infrastructure services. The term also includes increasing number of enterprise applications that are hosted on the servers of Cloud Computing providers and then rented out to companies who use them as a service. The data generated by the users of these applications is also stored on the servers of the providers. While some critics question the wisdom of storing important business data on outside servers, the approach does have strong appeal to SMEs who do not have resources, both financial and human, to store data on in-house servers and secure it properly. SalesForce.com has been one of the biggest successes of this model. Their CRM software has tens of thousands of customers who access the service through internet and store their data on its servers. Through its Google Apps for Businesses, Google is targeting companies to host their emails, document creation and editing, and Calendars. Business Intelligence (BI) applications are also making their way to clouds making this important segment accessible to SMEs. It is widely expected that other software vendors, like SAP and Oracle, will come out with offerings that follow the same delivery paradigm and are targeted towards SMEs.

Software Development Platforms in Cloud Environment

Another segment of Cloud Computing provides entire development platforms that companies can rent and then build and deploy their custom applications in the cloud. Increasing number of Cloud Computing companies are providing virtual machine images that have some of the common development platforms installed and ready to use. Examples include LAMP (Linux, Apache, MySQL, and PHP) web starters, Java, Ruby, and Flex pre-build environments. IBM has also made its flagship WebSphere Application Server, which is popular for building Java enterprise applications and web services, available on the cloud. SMEs which previously could not afford this IBM product can now rent its usage and deploy custom applications that can host mission critical applications.

Cloud Computing offers substantial cost benefits to SMEs in terms of how they maximize return from their IT investment. But like any other business expense, the whole process of adapting to Cloud Computing needs careful planning and execution. SMEs can partner with reliable outsourcing providers who can guide these companies through the whole process of finding reputed Cloud Providers, picking the right subscription plan, and developing, deploying, and maintaining their business applications and infrastructure using these Cloud based services.

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