How cloud computing can improve your operations and bottom line

One of the hottest IT topics these days is cloud computing. Each day, more and more companies are turning to Internet-based service providers to meet some or all of their business application and computing requirements. IT experts at The Gartner Group have predicted that cloud computing usage will triple over the next three years.

Smart Business asked Steven Vicinanza, Ph.D., CEO of cloud computing provider BlueWave Computing LLC, to discuss why.

What is cloud computing and why is it becoming so popular?

Cloud computing is using the Internet from your office to run applications off of servers that are located remotely in the ‘cloud’ or Internet. The cloud is just a metaphor for the Internet, which is often represented in network diagrams as a cloud. There are several reasons that companies use cloud computing.

1. Ease and convenience. Cloud applications are ready to go. For example, if you want an e-mail account, you can sign up for Google’s gmail inside of five minutes and start sending and receiving e-mails immediately. Compare that to the time, cost and management expense of setting up and running your own e-mail server.

2. Ability to roam. With Web-based applications, you are not tied to a specific computer. This means you can run your application at your office desktop, at home, from your laptop at Starbucks, and even via a Web-enabled cell phone, all with full access to all your data and resources.

3. Economics. Cloud computing is based on shared resources and huge economies of scale. Million-square-foot data centers leverage backup generation, multiple Internet connections, security and redundancy across thousands of service providers. These service providers build massive computing infrastructures with low cost per CPU cycle. Software developers share applications among millions of users, lowering per-user cost. Consider that a full-blown CRM application like could easily cost many thousands of dollars a month to purchase, install and maintain. Yet one can sign up for for $125 per month.

4. Reliability. Service providers are able to build a level of fault-tolerance and redundancy into their systems that most small businesses will never be able to match. Cloud computing is many times more reliable than the networks run by small companies who cannot afford the benefit of redundant power feeds, on-site generation, hot backup systems, specialized management software and expertise in data center operations.

5. Flexibility. For companies that are growing or in transition, it is easy to add computing resources in a cloud model. As a company adds employees, the cloud provider can easily scale up to match. Similarly, if the company needs to reduce expenses, it is easy to reduce the user or server count and the resulting monthly expenditure.

6. Cash utilization. Buying cloud services is typically done via monthly payments instead of a large up-front payment. This makes great sense for growing companies that want to conserve cash for other investments and growing operations.