Unless you’ve had your head in the clouds lately, you’ve probably at least heard of cloud computing, or as your more technically astute friends refer to it, The Cloud.

There’s no shame in not knowing exactly what cloud computing means. If you’re busy running a small business, you don’t always have time to keep track of every technical term being tossed around in cyberspace – and though the term might sound somewhat vague, the basic concept of cloud computing is a simple one.

What is Cloud Computing?

The Cloud is basically the Internet (derived from the representation of the Internet as a cloud in engineering diagrams). Cloud computing is the concept of storing, accessing, sharing and manipulating data, applications and services online using a remote server instead of in-house resources. Google Docs, Gmail and other Google services and applications are examples of cloud computing that you might already be using.
Bandwidth growth, faster downloads, greater processing horsepower and the explosion of more potent mobile solutions have all converged to culminate in the rapid evolution of cloud computing. Many experts predict the cloud will eventually overshadow traditional on-site networks.

Examples of Cloud Computing

Cloud computing encompasses a range of real-time services offered online. Some services are free, such as Gmail or Google Docs, and others can be accessed for a fee, such as Google Apps, which is the business version of Google Docs. It is helpful to understand a couple of the basic categories in which cloud services fall:

• Software as a service, or SaaS, delivers web-based software applications to users over the Internet. This can include all sorts of productivity and administrative software solutions for businesses. SaaS applications require no setup or maintenance – just access to the Internet.
• Storage and virtual computing solutions offer online virtual hard drive storage for your data, backup services, access to applications, virtual desktops and more – literally, an entire online computer in some configurations. Users can upload data, back up data, share documents and work from anywhere.

Other services, targeted to developers and IT users, include back-office tasks such as credit card or payroll processing, virus scanning, application development, security services, anti-spam and more.
A few examples of cloud computing include Salesforce.com (for enterprise software solutions), Skype, QuickBooks Online and a recently announced iCloud virtual computing solution from Apple, which is sure to feature some advantages for small businesses.

Benefits of Cloud Computing

There are obvious benefits to hosted services for your small business data, application and communication needs.

• Instead of being limited to on-site resources, your business can leverage the expertise of multiple IT departments spread around the world. This cuts IT costs due to the decrease in manpower needed and lower investment in software and hardware.
• Your users will have access to files from anywhere on multiple devices, including phones and tablets, and you won’t need to worry about maintenance, software troubleshooting or hardware failures (except for the hardware and software you use to get online).
• Cloud computing makes backing up your files automatic, eliminating the cost, time and equipment needed to perform local backups. Most important, the risk of data loss is slashed to near zero because of the built-in redundancy of multiple secure servers that these providers maintain. This prevents the potentially calamitous prospect of losing critical data to a local hard drive crash.
• You can share and edit documents, have voice and video conferences and collaborate with business contacts, colleagues, employees and contractors, no matter where they are located.
• Remote access reduces travel, commuting and overhead costs and could potentially ramp up worker productivity.
• Using someone else’s infrastructure frees your time and resources to focus on developing and marketing your products and services. You can react quickly and more cost-effectively to take your ideas from conception to the marketplace.
• You only pay for the services you need when you need them, liberating capital for investment in other areas and allowing you to scale up as your business grows.
• You can get more work done in less time and at a lower cost than with a traditional setup.

Is Cloud Computing Secure?

Some business owners worry that cloud services might have security or privacy holes that hackers can exploit. While there is always cause for caution when it comes to data security, service providers such as Google know that they must protect their clients’ data at all costs – and they go to great lengths to do this at a much greater expense than you could likely afford to pay on your own.

No computer in the cloud can be completely safe from hacks or hardware failure, but these events are extremely rare when compared to the huge number of transactions that take place daily. And if there is a problem, a permanent data loss is very unlikely due to the redundant backups that are standard procedure for cloud service providers.

Start Small and Scale Up

Is cloud computing right for every business? At this early stage in the cloud computing evolution, it depends on your circumstances. Before you make a decision on whether or not to move your business to the cloud, it’s wise to consider your needs, analyze the costs and benefits, and evaluate services and providers. If you decide to begin taking advantage of cloud computing, you can start small with minimal costs and disruption of operations, then scale up as your business needs require.