CLOUD COMPUTING EXPLAINED

The following is taken from an article written by Gary Turner, UK MD of Xero

For the uninitiated, let’s start with a very quick definition of what cloud computing is and why it’s so important. When you cut through the jargon, it is pretty simple: people access and use software applications that exist on the Internet, as opposed to those programmes living on the hard disks inside their PCs or Macs.

Cloud Computing

Some people have said that cloud has been around for a few years and is just being relabelled and while there is some truth in that, ‘cloud’ in its current form has only recently become available, thanks to some changes in IT infrastructure. I could go into more detail about what that means technically, but that is probably all that users really need to know. Perhaps one of the easiest ways to understand just why it is such a step-change is to draw a parallel with electricity. These days, most people don’t own their own electricity generator. Instead, we obtain it from a utility supplier, who has the hassle of buying, maintenance, refuelling and ensuring a constant service. Cloud computing is no different really. There is no need to buy lots of computing or network hardware, even if a user’s demand increases rapidly (because cloud can ‘scale’ easily and rapidly). There shouldn’t be any upgrade charges or tortuous contracts. Indeed, most cloud-based services are pay-as-you-go or subscription-based, with sensible cancellation policies.

Catalyst for change

Cloud has proved to be a catalyst, for both consumers and users of business software, touching pretty much every area of productivity or job function, from HR to marketing, sales to accounting. Since cloud computing doesn’t require software vendors to create mammoth stock and supply chains, they can get up and running very quickly. And instead, they are focusing more on innovation. And for me, this is where it gets really fun, because we are seeing a whole raft of younger companies using cloud-based technology to disrupt the ‘old world’ approach to software. The traditional ‘box shifters’ who have legacy customers, systems and cultures that can be hard to change are seeing their market shares eroded by companies who have been able to engineer new services from the ground-up, in tune with current demand. The good news for you – as a small business user – is that in many instances, you can now have access to the kind of world-class software functionality that previously would been an upfront investment with installation requirements, with the added benefits of unprecedented flexible access.

The bottom line

Let’s focus on one particular example: online accounting. As the MD of a company that provides cloud-based online accounting tools, I have to confess to a bias, but there are many other providers in this market area, suggesting that I am not alone in my conviction. One of the most important steps forward with cloud-based software is that a company’s financial records are available anytime, anywhere and on any Internet-enabled device, with everything centralised in one place. In practical terms, this can mean having real-time access to a company’s current cash position, or instant visibility of cash flow, debtor exposure or payments due. With live bank feeds added into the mix, small businesses can see in an instant exactly what transactions have come in that day so far, without needing any manual input (mention that to any business that has to process lots of incoming payments and they’ll understand just how big a deal that is).

Technology

Using smartphones, laptops or tablets, companies can make better use of ‘downtime’ – perhaps while on a train or waiting for a customer – to check their accounts. They can log in and issue invoices from a smartphone: we know of small business owners who are now making a virtue of doing this when they leave a customer’s premises, knowing that it not only gets that task out of the way, it also helps to improve cash flow (the longer you leave it to create an invoice, the more you are extending your terms of credit). Business owners can even use the camera function on their smartphones to upload images of expenses (again, better use of time than hunting through wallets, handbags and briefcases at the end of the week).

Better planning

And it is this ‘softer’ benefit that users of online accounting often cite, ranking it alongside the benefits of cash flow management. With cloud-based online accounting, small businesses can keep on top of accounts through small, daily actions. This is revolutionary for many of them: ‘doing the books’ becomes a routine part of daily life, rather than building up into an onerous task. Also, we hear from an increasing number of small businesses and their accountants that they are using online accounting to plan more effectively. By being able to simultaneously look at the books remotely, accountants can spot issues (for instance, a dip in cash-flow or over exposure to one customer) and advise the client, rather than trying to deal with a problem when it has occurred, or even when it is too late (traditionally, many accountants only see clients’ books at the end of the financial year).

What to watch out for

Being an emerging space there are a lot of new cloud suppliers out there, some more capable than others, so it makes sense to choose one that is technically excellent and financially stable with resources that mean they’re not likely to go out of business in a few months. Finally, with the cloud platform proving to be a great leveller, it is the features and benefits, not to mention design quality and ease of use that sets one cloud provider apart from another. So make sure you choose one that suits you, is intuitive to operate and which will continue to innovate. Cloud computing is here to stay and for small businesses in the UK, we are witnessing just the beginning of how it is revolutionising the way we access, use and pay for top-of-the-range software services. Technology is, for the first time, truly in favour of small businesses and can give you a real advantage, so make the most of it, particularly in these economically challenging times.