Wait, the cloud isn’t an ACTUAL cloud…?

Ok, you probably already know that. But you might be surprised at how many people don’t – in a recent study in the USA, 51% of those surveyed claimed that stormy weather can interfere with cloud computing.

So, while we’re probably preaching to the converted, we thought it might be worth doing a quick guide to the cloud. That way, if you come across anyone asking ‘what IS the cloud, anyway?’ you can send them this way!

The Facts

Most of the time, cloud computing refers to accessing software or hardware over a network, usually the internet. Rather than having to be downloaded and installed on a computer, applications are accessed through a web browser or a mobile app. Data is stored on severs at a remote location, rather than on a hard drive, CD or memory stick. In the past perceived security risks surrounding the cloud, and concerns that data being stored somewhere other than a company’s own offices translates to a lack of control, have scared off some potential users. However, this has recently become something of a misconception – a recent survey of 1,000 small business owners found that only 3% consider cloud computing to be ‘risky’, down from 11% last year.

However, Microsoft’s 2012 ‘Business in the Cloud’ research report found that only 51% of SMEs actually know what the cloud is. Another study revealed that almost 30% of Americans think that ‘the cloud’ refers to an actual cloud! However, since big players like Apple (with their iCloud service) and Google (with Google Drive) have started to enter the space, knowledge of and about the cloud has increased and will continue to do so. The past few years have seen the cloud rapidly gain popularity, even amongst bigger businesses who have previously always used desktop software.

Presumably the fact that some bigger players, like those mentioned above, are introducing cloud services has helped to ease some of the concerns consumers have around cloud security. People are starting to realise that cloud leaders like Google invest a lot more in the security of their data storage than most small or medium sized businesses do or could. One of the really strange things about the cloud is that even those who are nervous about the cloud are probably already making use of it without even realising it. If people are making use of services like Gmail, online banking, Hotmail or Facebook then they are already making use of the cloud.

Innovation

The cloud is much more than just a technological innovation – for many younger people, it is the de facto way of doing things. Members of Generation X have traditionally adhered to relatively ‘set’ roles and, perhaps, had a willingness to accept technical limitations. Generation Y has grown up in a period of rapid technological innovation and disruption. This is reflected in the way they work – they expect to be able to work from anywhere, at any time.

With children using Facebook, Twitter and webmail from a young age, the idea of a service that doesn’t meet these needs is completely alien. Career paths are much more fluid and flexible than they once were – many startup founders now function as CTO, CFO, head of marketing and everything else. Couple this with the ‘always connected’ ethos that many now subscribe to and it’s easy to see why the cloud, which facilitates the ability to work from anywhere, is becoming so popular.

Ooh, SaaSy.

There are several business models specific to the cloud, one of which is SaaS (Software as a Service, and pronounced ‘sass’ rather than ‘sars’). Rather than paying a lump sum to download an application, a monthly or yearly sum is paid per user. The model offers scalability, as users can be added or removed easily, and simplifies the processes of maintenance and support – both are usually handled by the cloud provider, rather than having to be dealt with by users. In the case of IaaS (Infrastructure as a Service), clients access virtual servers in the service provider’s data centre. Again, this offers a huge degree of flexibility – if a company only needs a few servers most of the time but experiences peaks in demand they can simply rent additional servers on the cloud system when they need them.

The ‘rent vs buy’ metaphor is one that’s often applied to cloud software, with traditional software equating to buying and cloud software being the equivalent. It’s probably not the best analogy, given that most people would rather buy property than rent it. Perhaps a better analogy is getting a new car – imagine you buy a car that depreciates over the space of a few years but you’re unable to sell it when you buy a new one. That’s traditional software. The other option is to rent a top of the line car that’s replaced with a newer, better model every time one is released. That’s the cloud.

One of the biggest advantages of the cloud is that, as mentioned above, it allows users to work from anywhere – people no longer have to bring laptops, hard drives or USB sticks with them to work on their data, they can do it simply by using any computer (or tablet or smartphone) with internet access. That means that people no longer need to be at the office to be ‘at the office’.

Collaboration

Another huge advantage of the cloud is collaboration – multiple users can work on the same set of data, in real time. This is particularly useful for employees who want to work on a document at the same time without having to email updates back and forth to each other; no one person needs to be responsible for a master document, because everyone has access to it. The cloud also removes other logistical barriers – rooms full of servers are no longer a necessity, and neither are box files full of paperwork or countless backup CDs and pen drives.

The aspect of collaboration is particularly important when it comes to cloud accounting – by working on one set of data together, clients no longer see their accountant as an obtuse force whom they only speak to once or twice a year. Instead, they become a trusted advisor. A confidante. A partner. For an accountant, this change in role is one of the biggest assets the cloud can bring – less admin work means that more free time to get into auditing and the meat of accounting and positively impact their clients’ business. It goes without saying that this sort of figure gets many more personal recommendations than a near stranger who calls once every couple of months to chase a shoebox full of receipts.

Are you accounted for?

A recent study revealed that 60.7% of end users are now using online accounting software. However, it’s not just small business owners who are waking up to the possibilities of the cloud – a survey of almost 1,000 accountants revealed that 42% of accountants believe that, before too long, ALL software will come from the cloud. As ‘the cloud’ becomes omnipresent, those who don’t embrace the change will lose out – understanding it is absolutely key to staying relevant and tuning into a new way of doing business.