If you’ve just started a small business, one of the most important things to get right is IT. Most businesses will need a website and use payroll and accounting software to manage their finances, and maybe customer relationship management software for managing customers.
But money will probably be tight and you may not have many, or any, IT staff. So how do you pick the technology that’s flexible enough to grow with your business and doesn’t have large upfront costs?
For many small and medium-sized enterprises (SMEs), the answer is cloud computing – servers, software applications and IT services that are run online, rather than on their premises.
Cloud computing has been a major trend in corporate IT during the past 10 years. Even if your business isn’t using it, you’re probably using it outside work – whether it’s Google’s Gmail for email, or Netflix for streaming TV and films.
Computing clouds can be public (the same computing resources used by different businesses), private (used by one business) or a hybrid of the two.
Most types of business software (accounting, sales, marketing and so on), and even computer networks and data centres, are available in the cloud. There are numerous suppliers of cloud technology, as well as IT consultants that advise businesses on how to use it. Some of the largest cloud suppliers include Amazon (Amazon Web Services, or AWS), Microsoft (Azure) and Google (Google Cloud).
The benefits of cloud technologies vary, says Gareth Meyer, director at Reading-based IT consultancy Ultima. “It’s not just about an IT cost reduction gained by moving to the cloud versus traditional on-premise solutions, as it’s rare that companies move their entire systems into public or private cloud environments,” he says.
One attraction of cloud computing is its flexibility. As a business grows, so too should its adoption of new technologies, says Peter Dorotiak, founder of Aspect IT, an IT support company based in Manchester. “When data storage is constrained, a business is restricted in how it can scale its environment to meet demand,” he says.
“Cloud technology allows a firm to start small and support the growth of the business over time – without any interruption to business flow or expensive, unplanned changes.”
Mr Dorotiak says that about nine in 10 of his SME customers are using cloud IT. “Prior to working with us, many of the small firms that we assist were unaware of the real benefits of moving data over to the cloud,” he says.
Other advantages of cloud computing include not having to buy hardware and software licences at the start of a contract, only paying for IT resources that you use, and being able to ramp up computing power at short notice to cope with spikes in demand from customers.
Research company Gartner has predicted that the global market for cloud computing will be worth $300 billion (£231 billion) by 2021, as companies digitise their businesses. Along with technologies such as automation, artificial intelligence (AI) and big data, IT experts even think that cloud computing could help Britain increase innovation and worker productivity.
Much of the IT of Angela Mortimer − a London-based recruitment company with about 200 employees − is in the cloud. For example, MS Office, MS Exchange, MS SharePoint, MS Dynamics NAV, enterprise resource planning software and VoIP (voice over internet protocol, which lets users communicate via telephone over an internet connection) are all hosted in the cloud.
The company moved from in-house IT to a managed service run by Nasstar IT, a, Telford-based IT services company. The IT project was led by Colin Hilton, then-Director of IT at Angela Mortimer.
“The switch has enabled us to consistently punch above our weight in IT terms, allowing us to support and develop our business at a speed and with a degree of sophistication that would have otherwise been impossible,” he says.
Adelaide Lodge Care Home LLP, which owns four care homes in Dorset, chose cloud technology when it upgraded its servers. Using the cloud meant that it only needed one server for the four care homes, according to Dominic Bennetts, who founded Carabiner IT, a Cardiff-based IT support company for SMEs.
According to Mr Bennetts, moving to cloud IT saved the care homes about £12,000 in IT costs (four servers on premises would have cost about £18,000 and probably lasted about five years, he says, while the cloud IT, for the same period, cost about £6,000).
In addition, if the care home had used traditional IT, it would have had to buy IT licences in packs of five – even if it just wanted to add one employee as a system user, he adds. With the cloud, the care home can buy one licence for each user.
Many small businesses are wary about using the cloud. Fewer than half (40 per cent) currently use it, according to the FSB report Spotlight on Innovation.
“Security is the biggest barrier when we discuss cloud strategy with our small business customers,” says Mr Meyer. “As a customer recently told me: ‘I would rather my team be responsible for who and when people access our data’.”
According to Government research on cyber security (Cyber Security Breaches Survey 2018), two in five micro/small businesses (42 per cent) identified at least one data breach or cyber attack in the past year, while FSB research found that two-thirds (66 per cent) of small businesses have been a victim of cyber crime.
Companies should check their supplier has accreditation for ISO 27001 ISMS (Information Security Management Systems), an international standard for keeping information secure.
Working out which bits of your business information are too valuable and commercially sensitive to store in cloud also reduces security risks. “Many customers worry about the implications of storing sensitive data in the cloud,” says Mr Dorotiak of Aspect IT.
“We help them to determine what is and isn’t safe to do. For example, businesses should employ multi-factor authentication and make sure passwords are protected. Access rights should only be allocated to those who require them.”
But large IT suppliers will, of course, have more experience and resources in cyber security than smaller firms. “AWS, Google and Microsoft are committed to securing customers’ data and have the finances, teams and capability to deliver secure environments that are just not achievable for most SMEs,” says Mr Meyer of Ultima.
Carlene Jackson, CEO of Cloud9 Insight, a Brighton-based company that helps SMEs use cloud technology, agrees: “Many firms are used to having a server in the corner and paying for an ongoing support contract to service the box. Microsoft spends billions of pounds a year keeping your data safe and systems protected, so they are a much safer bet than a standalone old server.”