The cloud and your bottom line

I recently helped a business owner with a small / mid-sized company make a very significant change in the way she manages her business that will increase the profitability and market value of her company.  We achieved that by using computing technology and software that, not so long ago, was available only to much bigger, richer companies but that now is available to anyone who wants to tap into “cloud computing”.   Cloud computing is a generic term that essentially means computing power and file storage that is available over the internet.  It comes in several varieties that I’ll touch on later but for my client, these are the benefits she now enjoys:

First, she now has technology at her fingertips that would have been cost prohibitive without the cloud

Second, she got it with no investment whatsoever in servers, networks, software or IT staff and, the total cost to her of going this route is 20 – 40% less than if she had tried to do it in-house

Third, because the service she is using is “in the cloud” she doesn’t have to spend time managing or budgeting for an IT department and network.  As a result she now has more time to spend on her core business.

Fourth, she now has near real time data on every aspect of her business and it is available to her in a dashboard with “drill down” capability.  Moreover, because the data is coming via the internet she can be anywhere in the world with her iPad and still be in touch with, and control, her business

Lastly, information and reports that used to take days for her staff to pull together are now available to her instantly.  As a result, she can now make better decisions with more timely and complete data.   And, that makes her more effective which, in turn, drives up the profitability and market value of her company and gives her an edge over her competition.

As a part time CFO for emerging companies, I am always looking for ways to help my clients get cash.  One of the first things I like to look at is a client’s internal processes.  This is where my Six Sigma experience comes in really handy!  I can almost always find opportunities to streamline existing processes while improving the quality of the service or product of the company.  Doing so eliminates expenses of tasks that don’t add value or, in some cases, are so out dated that they are actually counter-productive.  In other cases I find opportunities to apply technology to add functionality that improves a company’s competitiveness and that wasn’t available before.  In both cases, the bottom line improves and cash is freed up for investment in growth.

Cloud computing is not necessarily the answer for every company but the potential benefits are so significant that it should be checked out.  And, this is an industry that is growing by leaps and bounds.   The CEO of one big technology company recently stated in the Wall Street Journal that cloud computing is the third major wave of IT excitement preceded only by the advent of the PC and the adoption of the internet.  It will only get better and better.

The last thing I’d like to share is that there are three major subcategories of cloud computing.  One is called ‘managed services’ where a managed service provider manages all IT functions of a company at a remote site.  In that case the company’s employees access the application programs they normally use via the internet rather than via an internal network or hard drives on individual PCs.   The second major area of cloud computing is called Software as a Service (SaaS).  In this scenario, users subscribe to an application program like QuickBooks, SAP, or NetSuite, that is hosted by a supplier who provides access to the software to many clients.  These services are usually available on a fee per seat per month basis and, of course, are internet based.  On a ‘total cost of ownership’ basis the cost of these services is almost always significantly less than doing it yourself in-house because the service provider can spread the cost of the software and his operation over many clients.   The last major area of cloud computing that is closely related to SaaS is called mobile computing.  This is the technology that makes smart phones so powerful.

Anyway, I hope you agree that cloud computing is worth checking into if you own or manage a business.

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