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Broadband internet access and the ubiquity of mobile devices make cloud computing a viable option for small businesses everywhere.
When it comes to data storage, processing and collaboration, many businesses choose the flexibility and convenience of cloud computing over traditional local hosting and on-premise software. With cloud computing, you can access and store data and applications online instead of on a hard drive. If your company uses Google Docs for editing and document collaboration, Dropbox or Google Drive for file storage, Slack for cross-team communications, or online CRM software for managing sales, you’re using cloud computing.
Working in the cloud offers small businesses many benefits, including enhanced collaboration, easy access and fast turnaround. However, cloud computing drawbacks include security concerns and fewer customization options. We’ll explore cloud computing, how it works, cloud services to consider, and the pros and cons of cloud computing for small businesses.
Cloud computing is the on-demand delivery of computing services, including applications, data storage and data processing, over the internet. You’ll usually pay for cloud computing services on a pay-as-you-go basis, so you pay only for the applications and cloud services you use. This approach helps lower your business’s operating costs and allows for flexible scaling.
In today’s ever-changing business climate, small business owners must be able to access data and applications from their computers, tablets or mobile phones, whether in the office, out in the field or on the road. Cloud computing provides this anywhere access via an internet connection.
Chances are, you’re using cloud computing right now, even if you don’t realize it. Cloud computing makes it possible behind the scenes, whether you use an online service like Gmail or Outlook 365 to send an email, collaborate on a document, store files or stream a video. [Related article: Best New Gmail Features for Business]
Here are some of the most common cloud computing uses:
A web host houses your organization’s website and makes it accessible on the internet. You can choose a traditional web host or a cloud hosting service.
“The biggest differences between cloud hosting and traditional web hosting are related to ‘scalability,’” said Jon Heimerl, a freelance security strategist who has spent four decades working in information security for Fortune 100 companies. “They both offer the same flexibility in access and outsourced support, but cloud hosting also typically uses multiple servers and/or virtual machines, while supporting functionality to dynamically increase CPU and storage capacity to respond to increased demand.”
Here’s more on traditional hosting vs. cloud hosting.
A traditional web host uses physical server space to handle its clients’ web hosting needs. Within the traditional hosting space, services are either dedicated or shared. Each option has its merits.
While traditional web hosting relies on physical server space, cloud-based hosting carves virtual server space for each user. These are some key aspects of cloud web hosting:
Cloud-computing services range from data storage to functional programs, including accounting software, customer service tools and remote desktop hosting. These services can be categorized into three models: infrastructure, platform and software as a service.
Cloud services store data and host services in three primary ways: public, private and hybrid cloud. Cloud services may pose a security risk if you choose a provider whose storage model doesn’t align with your business’s size and needs.
Business cloud computing use is on the rise. According to Foundry’s 2024 cloud computing research, 92% of companies use services connected to or run in the cloud. Considering that the pandemic made online work ubiquitous, the trend is likely to continue.
Cloud computing can help businesses save time and money by boosting productivity, improving collaboration and promoting innovation.
“Businesses can benefit from cloud computing because it enables scalability, resource flexibility, centralized data security, and data accessibility from anywhere,” said Amina Bashir, the executive director of TLP White. “Depending on your cloud provider, you get some added perks, giving you a chance to focus solely on growth and innovation on-demand resources.”
Here are some of the top benefits of adopting cloud services for your small business:
While there are many benefits to moving your business operations to the cloud, you should be aware of several potential downsides.
By definition, cloud computing services require an internet connection. If you have an unstable or low-speed connection, your team will have trouble accessing the cloud applications and data they need to perform their work. Additionally, repeated downtimes, lags and errors due to a spotty internet connection may reduce their productivity.
Ensuring your team has access to a high-quality, high-speed connection can easily address this cloud computing drawback.
“A move to cloud computing can complicate computer and information security for a company,” said Heimerl. “The cloud provider is responsible for the infrastructure components, the hardware, servers, and cloud networking.”
“However, the business remains responsible for making sure the provider’s controls meet the needs of the business (including regulatory needs), and the business is still responsible for the data and applications that run in the cloud,” said Heimerl. “This shared responsibility needs to be actively managed to reduce the chances that something is missed or miscommunicated.”
The key to maximizing security is finding a reputable cloud service provider, understanding its contingency plans in the event of a security breach and taking your own steps to bolster security. To improve cybersecurity, ensure there’s sufficient data encryption, implement additional authentication measures, introduce a data loss prevention (DLP) solution, and establish clear communication between management, your IT team and the cloud provider to minimize security incidents and formulate a clear response plan. [Follow these cybersecurity tips that take less than an hour to implement.]
Ask cloud computing vendors these 10 security questions before signing up for their services:
Compliance is an issue for any business that uses backup services or cloud storage. In fact, according to Flexera’s 2024 State of the Cloud report, 74% of SMBs and 76% of enterprise-sized businesses consider compliance to be their biggest cloud computing challenge.
“Cloud computing can present compliance challenges to any business, especially to small to medium sized businesses who don’t have the same infrastructure as a large business,” said Heimerl. “The business needs to ensure that the selected cloud environment is built to support regulatory requirements like encryption, segregation, backups, and incident response.”
This can be especially critical as every time your company moves data from internal storage to a cloud, it must comply with industry laws and regulations. For example, healthcare organizations must comply with HIPAA rules, retail companies must comply with SOX and PCI DSS regulations, and companies dealing with the European market must comply with GDPR standards.
“Depending on the compliance requirements, you are likely to find many cloud services compliant with the different regulatory requirements,” said Tim Condello, director of cloud and AI/ML services at Distributed Technology Group. “However, the customer still has the burden of ensuring that they operate the service in a compliant manner.”
While cloud computing offers the benefit of not managing complex infrastructure like servers in-house, saving your company time, money and effort, this means less control over your company’s software, systems and computing assets.
With less oversight and control, it becomes harder to assess security system efficiency, implement incident responses, or get a complete overview of data and user activity to identify abnormal patterns and potential breaches.
To mitigate this lack of control, assess every new cloud provider’s allowed visibility level, and determine what measures it takes to prevent data breaches. You can also use a monitoring tool or set up an API to help you get insights into your data.
Implementing any new technology requires training personnel and establishing an effective troubleshooting system during and after the launch. Initially, you may also encounter resistance among your employees, especially those unfamiliar with cloud technology.
However, once you establish the onboarding process, determine IT team members responsible for implementing and adopting cloud services, and outline the benefits of cloud operations, you can get your company on track in no time.
While we addressed potential security issues as a cloud computing drawback above, it’s essential to understand precisely what can go wrong in a cloud computing setup.
According to Fortinet’s 2024 Cloud Security Report, some of the most pressing cloud security challenges are incorrect cloud infrastructure setup, access control and identity management, and data security and privacy.
If you’re considering moving your operations to the cloud or implementing cloud services, consider these top cybersecurity risks.
Ease of access makes cloud computing attractive to many small businesses, but it’s also the source of potential security risks. In many organizations, employees have varying cloud service access levels. The more people and access levels involved, the easier it is to overlook an unauthorized access setting.
Additionally, the infrastructure’s cloud nature means companies must rely on their provider’s security controls. These controls aren’t always straightforward, opening more avenues for misconfiguration.
“One thing that companies can focus on to secure their cloud environment is having robust identity and access management (IAM) practices,” Bashir said. “This can help ensure only authorized people can access their data and cloud environment.”
Businesses should track all levels of access your team members have to various cloud services. You can even create a basic tracking document in Google Sheets if you keep it updated. Conducting regular cybersecurity audits that include security details and protocols from all cloud providers can also reduce the risk.
APIs allow better control and visibility into your cloud systems and applications. However, external APIs are often insecure and provide an entry point for potential cyberattacks that can compromise confidential data and manipulate services.
According to the Salt’s 2024 State of API Security Report, 37% of respondents said they experienced an API security incident in the previous year, compared to just 17% of respondents in the 2023 report.
Building in-house APIs can significantly reduce this security risk. However, not all businesses have the internal expertise or resources to do this. To mitigate the risks, implement authentication and authorization practices, encrypt traffic using TLS/SSL, validate input, log API activity, use API firewalls, and conduct a regular audit and penetration testing to identify and fix outdated APIs.
Aside from malware attacks, cloud data can be lost if the cloud provider accidentally deletes it, if there’s a physical catastrophe like a fire or earthquake that damages remote servers, or if an encryption key is lost.
To reduce the risk of data loss, ensure you back up all your data stored in the cloud. At the very minimum, you should follow the 3-2-1 rule of secure backups:
Also implement a cloud DLP solution that protects your data from unauthorized access and automatically disables access when suspicious activity is detected.
The cost of cloud computing varies widely, depending mainly on the cloud service you need. Here’s a general idea of typical costs:
Cloud-based software pricing also depends on the industry. Other factors that affect pricing include the number of users, how you will launch and distribute the software across the company, and priority tech support options.
Cloud computing offers a range of benefits to businesses, from data storage and backup security to being cost efficient and easily scalable. Many popular SaaS solutions also are cloud-hosted applications, making them available to employees in any location at any time. This flexibility that cloud computing can help maximize workplace efficiency by allowing for a distributed workforce and the ability to access necessary data from anywhere.
However, businesses need to be aware of some of the drawbacks associated with cloud computing, including potential data leaks and compliance concerns. If businesses carefully vet their cloud provider and institute some security procedures, then cloud computing offers a wealth of benefits.