What’s in the cloud? Storage, savings and security issues

Filed under Special Reports

By Ann Meyer

Small businesses use cloud computing for backup, email, document management and collaboration.

Storage is the top use of cloud computing among small and midsize businesses, according to a recent CompTIA survey.

For Cancer Treatment Centers of America, serving patients involves more than medicine.

It’s also about guaranteeing access to patient records 24 hours a day, while maintaining patient privacy with a secure IT environment, said Chad Eckes, chief information officer at the privately held company based in Schaumburg.

That’s why the company recently invested more than $1 million in a private cloud computing system with “redundancies” to protect against system outages, Eckes said. The company’s private cloud launched in April about six months after the advent of the required technology, he said. It will assist the company in complying with the Health Information Technology for Economic and Clinical Health Act that provides financial incentives to physicians for meaningful use of electronic health records, he said.

“It’s not a cheap solution that’s for sure,” Eckes said. “It’s protecting us from unplanned and planned downtime.” (For more information, see related story on SmallBusinessExecutive.)

Subscription pricing

But businesses don’t have to build their own private clouds to reap the benefits of computing in a hosted environment. And in fact, some cloud-based applications are available for $40 a month or so, allowing small businesses to gain new capabilities, storage capacity and flexibility by using applications and storage than can be accessed remotely by multiple users.

Cloud computing is ideally suited to small businesses’ limited budgets, yet only a third of small businesses currently report using the technology, said Barry Sloane, president and chief executive of the Small Business Authority in New York, which offers cloud computing. In part, it’s because cloud-based solutions providers often target larger companies.  “The cloud has not been aggressively marketed to small businesses as a benefactor,” Sloane said.

Simple applications

In addition, many small businesses owners don’t understand it or trust it.  “It’s a bit of an amorphous topic. It’s hard for business owners to visualize and get their arms around,” Sloane said. Still, it can be as simple as online banking, which operates in the cloud. Many e-mail systems also are cloud-based as well as document storage systems and Internet-based applications like Salesforce.com.

CompTIA survey on cloud computing benefits for small businesses

Cloud computing can offer expanded capabilities, lower costs and remote access to data, a CompTIA survey indicates

The myriad options and widely varying costs can be confusing. “It becomes an involved decision,” said Seth Robinson, director of technology analysis at the Computing Technology Industry Association in Downers Grove. The most common uses of cloud computing for small and midsize companies include  backup storage, e-mail, document management, collaboration, customer relationship management and productivity applications, according to a recent CompTIA survey of 189 small and midsize businesses using cloud services.

To use the cloud effectively, companies need to determine what type of computing they want to transfer to the cloud and what’s the best way of moving it, Robinson said. The CompTIA  survey indicates 31 percent of respondents said the transition was more difficult or costly than expected.

But security is a top concern for 54 percent of respondents, followed by reliability of the cloud provider, which was identified as a concern by 37 percent, and reliability of internal Internet connection listed by 34 percent.  In addition, 31 percent of respondents had concerns about the long-term pay-as-you-go model.

What to look for in providers

Most small businesses can’t afford to spend $1 million to commission a private cloud, so they should carefully research providers of cloud-based storage and applications to avoid surprises, said Steven Ostrowski, director of corporate communications at CompTIA, which provides a list of providers that have been audited and received the group’s Security Trustmark stamp of approval.

In addition, Ostrowski recommends reading the service agreement carefully before signing it because many providers won’t be held liable for system outages. Also ask for references who can talk  about their experiences with the cloud provider and in particular about their transition to the cloud, Robinson said. Even then, there’s no guarantee. “So much of this technology is new that there are going to be instances where you don’t know what’s broken until it breaks or there’s a breach,” Robinson said.

Security issues aside, cloud-based applications are growing in popularity because they provide applications at a fraction of the cost of custom solutions that can put small on a par with large corporations. While private clouds are more expensive than those designed for multiple users, they also  have cost benefits because of the mobility of the computing system, Robinson said.

Return on investment

Cancer Treatment Centers of America is estimating a payback period of about 18 months for its private cloud, due largely to the labor savings from eliminating the scheduled maintenance.

While company has used electronic patient records since 2008, its system required more than 300 hours of planned maintenance each year, during which time manual records were kept and later keyed in to the system. So it turned to cloud computing, building a private cloud with several layers to protect against a system failure, Eckes said.

“We basically have multiple production environments that are up and running in the same data center,” Eckes said. If one production version goes down, another picks up the processing automatically. To test the system, Eckes has unplugged the data servers and watched the system heal on its own, he says.

Software-as-a-Service options

Small businesses are more likely to use software-as-a-service cloud-based applications, which often include maintenance and upgrades as part of their fee schedule, eliminating the need for small businesses to manage those aspects, Robinson said. For small businesses, cloud-based applications that use a subscription model free up capital for other purposes.

While about one-third of small businesses and 42 percent of midsize firms report using cloud computing so far, another 35 percent say they plan to use it in the future, according to the CompTIA survey. “We’ll see more opportunities around it, as people do more and make sure their data is secure,” Robinson said.

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