I am gung-ho about cloud computing, so much so that in Why Cloud Computing Is Ideal for Small Businesses I say that cloud computing is the best thing for small business since the invention of the stapler.
But that doesn't mean that I think every small business should immediately throw out all their servers and software and conduct all their business operations in the cloud.
Small business owners have different needs and different comfort levels. It may be more advantageous for you to use cloud computing only for certain applications. Or even not at all.
Before you throw caution to the winds (sorry – couldn’t resist!) and leap wholeheartedly into the cloud, consider how these disadvantages of cloud computing could affect your small business.
5 Disadvantages of Cloud Computing
1) Possible downtime. Cloud computing makes your small business dependent on the reliability of your Internet connection. When it's offline, you're offline. And even the most reliable cloud computing service providers suffer server outages now and again. (See Cloud Computing Service Outages in 2011 (About.com New Tech).)
2) Security issues. How safe is your data? Cloud computing means Internet computing. So you should not be using cloud computing applications that involve using or storing data that you are not comfortable having on the Internet. That being said, established, reliable cloud computing vendors will have the latest, most sophisticated data security systems possible as they want your business and realize that data security is a big concern.
Switching to the cloud can actually improve security for a small business, says Michael Redding, managing director of Accenture Technology Labs. "Because large cloud computing companies have more resources, he says, they are often able to offer levels of security an average small business may not be able to afford implementing on its own servers" (Outsource IT Headaches to the Cloud (The Globe and Mail).
3) Cost. At first glance, a cloud computing application may appear to be a lot cheaper than a particular software solution installed and run in-house, but you need to be sure you're comparing apples and apples. Does the cloud application have all the features that the software does and if not, are the missing features important to you?
You also need to be sure you are doing a total cost comparison. While many cloud computer vendors present themselves as utility-based providers, claiming that you're only charged for what you use, Gartner says that this isn't true; in most cases, a company must commit to a predetermined contract independent of actual use. To be sure you're saving money, you have to look closely at the pricing plans and details for each application.
In the same article, Gartner also points out that the cost savings of cloud computing primarily occur when a business first starts using it. SaaS (Software as a Service) applications, Gartner says, will have lower total cost of ownership for the first two years because SaaS applications do not require large capital investment for licenses or support infrastructure. After that, the on-premises option can become the cost-savings winner from an accounting perspective as the capital assets involved depreciate.
4) Inflexibility. Be careful when you're choosing a cloud computing vendor that you're not locking your business into using their proprietary applications or formats. You can't insert a document created in another application into a Google Docs spreadsheet, for instance. Also make sure that you can add and subtract cloud computing users as necessary as your business grows or contracts.
5) Lack of support. In These Issues Need to be Resolved Before Cloud Computing Becomes Ubiquitous, (OPEN Forum) Anita Campbell writes, "Customer service for Web apps leaves a lot to be desired -- All too many cloud-based apps make it difficult to get customer service promptly – or at all. Sending an email and hoping for a response within 48 hours is not an acceptable way for most of us to run a business".
The New York Times puts it this way: "The bottom line: If you need handholding or if you are not comfortable trying to find advice on user forums, the cloud probably is not ideal" Thinking About Moving to the Cloud? There Are Trade-Offs.
Bottom Line: Cloud According to Your Comfort Level
In my opinion, cloud computing is a great opportunity for small businesses to off-load the hassle and costs of IT management – as long as they can live with the disadvantages. Security issues related to having their business data 'out' on the Internet seem to be the number one concern of small business owners.
One approach might be to start cloud computing slowly; choose one or two of your business applications to replace and see how it goes. Hopefully over time you'll become more comfortable with it and able to reap even more cloud computing advantages.