Hosted ExchangeCloud technologies have conquered vast IT territories and keep marching in all directions. How do cloud solutions compare to the old fashioned Server solution in small business environments? The simplest, most accurate answer is rather ambiguous: "it all depends". For some businesses, cloud technologies can play a very limited role, while others should embrace it at once in order to enjoy a savings, support simplicity, and longevity of a cloud solution.

First let's break down cloud types of interest and focus on each type individually.

IaaS - Infrastructure as a service | Cloud provides computers, as physical or more often as virtual machines. Such computers are located off-premises thus its maintenance is someone else's headache. Amazon, Rackspace are big players in this area.

SaaS - Software as a service | Software and corresponding data are located in the cloud. Users do their work via Web Browser essentially using their computers as a thin client. For example a user opens Word-processor online (displayed in a web browser) and once finished the document is stored already online and ready for sharing or access from other locations. Google Apps or Microsoft Office 365 are perfect examples of this type of a cloud.

STaas - Storage as a service | The simplest type cloud of all - it provides Online storage. Dropbox, Carbonite backup services live in this niche.

On top of this classification we should mention Public and Private clouds. A Public cloud solution holds its users in one container so-to-speak and the boundaries are thin. A Private cloud is dedicated for consumption solely by a dedicated customer and therefore there's a lot fewer security concerns.

It's a popular belief that a cloud solution is always cheaper because virtualization substantially cuts down the cost of hardware and management. It's not necessarily the truth for a consumer because capitalism is not dead; nobody banned the supreme principle of maximizing profits and marketers  define pricing accordingly. What is certainly true though is that for a large-scale provider cloud technologies bring substantial savings. A moderate fraction of it might reach a consumer, especially during these early cloud days when there are tons of low-level freebies, promotions and incentives to migrate away from local Server lands.

Let us start with IaaS and illustrate a route of migration from old-school dedicated servers to an IaaS cloud: we'd just use ourselves (Allora) as an example. Our Small Business houses its servers via IaaS in its own Private cloud in a co-location facility at CarolinaNET. In non-techy terms it means that instead of three physical computers running three dedicated servers we are running a dozen virtual computers in Allora Cloud with awesome features like scalability, redundancy, instant backups, etc. Of course, we have in-house engineers who made it happen. Let's say it's not the case and we had to use a firm like Rackspace to outsource such IaaS cloud scenario for us. The cost projections and tests result are utterly disappointing - no savings what-so-ever and performance is miserable compared to a dedicated server (or Allora Cloud) because major players hyper-optimize their resources, stretch it thin and it leads to very slow Input-Output performances. cloud virtualizationThere are circumstances when IaaS cloud technology does make sense for a Small Business because its Upfront Cost is much lower than an equivalent "in-house" solution. Nevertheless we'd recommend that IaaS path should be taken with due caution from the perspective of a Small Business network owner.

Here's a quick comparison of IaaS Cloud Technology vs Dedicated Server solution which is fairly accurate except for the bottom pricing row ($200/month cloud cap is absurd, for instance: this self managed Small Business Server 2011 cloud hosting starts at ~$360 / month while the cost of server software is ~$800)

Now is a good time to look at the bright side of cloud computing available to Small / Mid-Size businesses: SaaS. It truly shines for small-scale organizations with modest IT demands. Let's assume that
  1. most office computing revolves around basic Word-processing, Email, Web
  2. there is no need for specialty applications designed for server-based operations
this would mean that Google Apps or MS Office 365 could be a perfect fit. Microsoft's solution is more expensive however it is more robust given the legacy support for Microsoft Office documents that most business have accumulated over the years. Office 365 allows a hybrid approach of using both Cloud versions of Office Applications and regular Desktop Office suites. Google deals with this issue via converters.

Web-based applications are adequate for non-sophisticated jobs but its capabilities are not as powerful compared to its Desktop peers. It should be noted that once a user crosses a certain threshold of scale and complexity a Web Application might become very busy displaying "Loading..." sign rather than allowing a user to produce work. For instance a spread-sheet of 5,000 rows with 50 columns presents zero troubles for a Desktop App while working online with such document might quickly get frustrating. Connection quality / speed and browser limitations are major negative factors for SaaS cloud technology. Office 365 deals with this by allowing both Desktop and Web applications, essentially bridging two worlds.

Groupware (shared calendar, contacts, tasks), Comunication and Email cloud solutions have been very affordable (if not free) and successful all around: Hosted Exchange, Gmail, Yahoo, GTalk. To be fair - there's a strong concern about security and service outages. Here's a slightly biased article from PC World discussing these issues and somewhat embellishing threat levels of these cloud technologies.

So, what are current boundaries of SaaS cloud technologies?
  1. If your organization deals with Graphic Design, Photography, Video editing, Sound Recording it is safe to dismiss the idea of adapting a SaaS cloud technology for at least a few years. The prime reason here is Data Size vs Internet Speed. Most businesses run on 2-20Mbps downstream and 1-5Mbps upstream these days. It's not even LAN speeds of mid-nineties. Here's a real-life sketch: 100 images of adequate quality (TIFF or RAW) weigh ~20MB x 100 thus uploading them would amount to 2GBs upstream and it would takehalf a day in actuality. The connection speed is one of the top drawbacks of Cloud computing because the fastest way transfer 1TB of data is still Fedex (unless you live in Colorado Springs geared by future Internet provided by Google).
  2. There are grand numbers of specialty network applications out there that were designed for LAN and Microsoft Server integration. Building a cloud replacement is simply not possible sometimes because of the required Data throughput and proprietary hardware requirements. At times there is a suitable replacement however conversion, migration and employee re-training is not exactly cheap.

The last tier of Cloud Technologies for Small Business that we'd like to discuss is STaas - Cloud Storage. It's simply fantastic for small groups of employees working from remote locations (home?) or travelling a lot. Dropbox, Google Drive, SkyDrive - here's an excellent comparison of STaaS cloud soltuions. We'd merely add a quick run down of Pros and Cons:
Pros Cons
Data is accessible via a folder on your hard drive, web or a smart phone. Permission sets on Folders for group colaboration are rather simplistic compared to Microsoft / Linux network and file systems.
Redundancy, undelete functionality and version tracking Security concerns, potential policy violations for some firms not allowing confidential data to leave the building
Sharing with general public is super easy Free data storages are very modest in size. Commercial products aren't dirt cheap: Dropbox wants $800 a year for 1000GB storage.

Other examples of STaaS cloud solutions would comprise Flickr, Picasa  - picture storage; SoundCloud - sound storage; YouTube, Vimeo - Video storage, etc.

In conclusion of this article we would strongly recommend starting using cloud technologies with a  consultation by an IT professional. It's best to analyze the situation at hand, goals and potential cloud solutions that could fit the bill. This page presents such analysis from a perspective of a start-up firm on a limited budget. The optimum result is often a hybrid solution. An IT consultant will help you avoid making gross miscalculations and costly misunderstandings of cloud capabilities.

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