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Fear Factor Decreases for Cloud Computing Services

Many businesses start small, using sharing services such as Dropbox and Gmail

Data security on shared servers is main concern holding back businesses from moving to the cloud.

Close up of someone typing on a laptop.
Close up of someone typing on a laptop.

Michael Stoudt was getting tired of all the tasks involved in exchanging financial records with his clients and staffers. They’d email him files, he’d download them to his computer, work on them, and then email them back.

The Allentown, Pa., accountant longed for a common environment where the files could live, always visible to himself, his client, and his part-time employees who worked on the same bookkeeping documents from home. So he tried uploading a few records to the free Web-based file sharing service called Dropbox.

The accountant had taken his first step into the cloud.

That’s the way many small businesses make their way into cloud computing — an umbrella term for Web-based services where users can store, share and create data outside their own computers. The Web space they occupy on the servers of those sites, such as Dropbox, is “the cloud.”

Small business owners who’ve become comfortable with cloud computing by using free consumer services like Gmail and Dropbox may provide a growth arena for big enterprise software sellers, says tech support executive Jill Billhorn. Those vendors are trying to woo customers with paid cloud subscriptions to programs such as Microsoft Office and Intuit’s Quickbooks.

“I believe the small business marketplace will really drive adoption,’’ said Billhorn, vice president for small business at Vernon Hills, Ill.-based cloud services provider CDW.

But will small firm owners who now buy software packages at Staples agree instead to pay a monthly subscription fee to access the same programs through the Web? As cloud marketers see it, the change can bring significant advantages. The cloud subscription seller handles software upgrades and troubleshooting. Business subscribers can create reams of data using the memory and processing speed of the cloud host’s system, rather than investing in faster new computers or extra hard drives. The total cost overall can be lower, cloud evangelists maintain.

Stoudt, the CPA, made a big leap to the cloud last year, after struggling with snags in his traditional office setup of assorted computers with no internal network. Often, his clients’ QuickBooks files were too big to email between computers. And as he worked on files, the clients often continued to update the original versions on their own desktops. Eventually, multiple versions had to be painstakingly reconciled.

"If the Internet goes down at the office, I can go home and use my wife’s laptop." -Accountant and cloud convert, Michael Stoudt

To streamline file-sharing, Stoudt converted his small practice to a cloud operation designed by independenceIT, a technology services company also based in Allentown. Now, instead of installing software into every staffer’s computer, Stoudt buys cloud subscriptions for each employee. The workers log into individualized Web-based workplaces that provide the applications each worker needs. IndependenceIT also supplies technical support, data backups and security measures.

“If the Internet goes down at the office, I can go home and use my wife’s laptop,’’ Stoudt says. Workers can connect to their virtual desktops using any device with a Web connection, from PCs to smart phones and iPads.

Tony Whitton, chief executive officer of independenceIT, said his company can quickly add extra Web desktops for companies that hire temporary staffers during busy periods — such as event planners or accountants.

But it’s not an entirely easy sell. Most small business owners are proceeding more slowly than Stoudt to move entire operations to the cloud.

CDW commissioned a study of cloud adoption in 2011, says Billhorn. Only 21 percent of small and medium sized businesses identified themselves as cloud users, and CDW projects modest growth in over the next five years.

Data security was the main concern holding back businesses of all sizes from greater cloud involvement, the CDW poll found. Among IT managers, 47 percent said their organizations would probably choose to create a “private cloud,’’ rather than sending their data to shared servers. That costlier private option would reduce the cost savings of cloud computing, the study acknowledged.

Even so, Whitton said, small businesses are much more receptive than they were when independenceIT started offering cloud services a dozen years ago. In the past, small business owners were often alarmed by the prospect of turning data over to an outside firm.

Potential clients are now more familiar with operating on the Web, Whitton said. Their customers, who used to respond to print ads and phone in orders, now browse websites and buy online. Small businesses are already grappling with data security questions due to their exposure to the Internet as well as wireless devices. IndependenceIT now markets its security protections — including firewalls and biometric identity checks at its server locations -- as an advantage in cloud computing.

A 2011 study by the technology consulting firm SMB Group of Northborough, Mass., found cloud-based services gaining ground since 2010 among small and medium-sized businesses making IT purchases. While “packaged’’ software still leads in all categories, sales increased by 10 percent for cloud “collaboration’’ programs, which includes file-sharing and email.

The firms surveyed also said they planned to increase their cloud spending in the next 12 months. For example, the SMB study predicts that the sale of virtual desktops like those used by Stoudt’s CPA practice will rise from 24 percent to 34 percent of purchases, while comparable packaged software will drop to 66 percent.

SMB Group calls cloud computing “the new normal,’’ and says, whether business owners realize it or not, the cloud is a part of their office operations.

“There are very few people out there not using any cloud service,’’ said SMB Group partner Laurie McCabe. As their experience with file-sharing services becomes more common, adoption will increase, she predicts.

“That fear factor has subsided to a large degree.’’

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