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I originally published a blog post surrounding cloud computing in August 2010. It is interesting to re-read it now to compare not only how the cloud computing landscape has changed, but also changing understanding of this terms amongst the population in general.

What is Cloud Computing?

Cloud computing is one of several terms applied to software services provided through the internet to many different users (with slight variations in meaning this is also referred to as Software as a Service or SAAS, online computing and hosted computing amongst other names). If you run a cloud computing application you do not need to install your own server, or load up the software locally, just open a web browser (Internet Explorer, Firefox, Safari etc) and log into your account.

This technology has been around in various forms for many years, but over the past few years has really started to take off. Some of the best recognised applications include Facebook, Google Documents and Microsoft Sharepoint and there are many more.

Now we are seeing more applications being released aimed at the small business market, in areas such as accounting, payroll, business intelligence, CRM and many others. The number of products – both in Australia and overseas – is growing rapidly.

So why are cloud computing solutions particularly useful for small businesses?

· There is no upfront cost for the software, just a monthly subscription which helps with cashflow.

· You do not need to install a server or any other IT infrastructure, again a big saving in cost plus this is a much simpler solution for those small businesses without an in-house IT team.

· You are able to access your data from anywhere, which is a great solution for the small business owner who wants to log in from home, or for businesses that run virtual offices.

· The functionality offered by many of these applications for a small monthly cost rivals what you could get from desktop solutions costing 10s of thousands of dollars.

· The ability to invite other users in to your application can provide you high levels of on-demand support at a very low cost (for example from you bookkeeper or from your account).

Cloud accounting solutions are also not new, but only in the last couple of years have they started to take off in terms of number of users. Xero and Saasu have been available in Australia for several years, and now have upwards of 22,000 and 12,000 customers respectively MYOB has just launched LiveAccounts and is expected to grow its customer base rapidly. There are numerous other solutions available.

And what about the downsides? The most common question relates to security of data, but in a practical sense the security risks to an SME of having their data “in the cloud” is far lower than having it on PC or server in their office: the risk of unauthorised access is almost certainly lower (the usual provisos apply about safeguarding passwords), the risk of loss of data through fire, or theft is far lower.

The take up of online solutions is expected to grow rapidly over the next few years: various studies by the Garner Group and others have predicted that 25% - 40% of new accounting systems will be cloud based within the next 2 years. The ease of use, cost of ownership and ability to collaborate online make hosted solutions a vastly superior option for most small and medium businesses.

At Cloud Solve we work with a range of cloud-based business systems, and can help you determine which of the many options available is most suitable for your business. We particularly recommend Xero for your accounting and bookkeeper, sometimes in conjunction with Vend for point-of-sale (POS) and Unleashed for inventory management. Please contact us if you'd like more information about any of these systems and the benefits they could bring to your business.

It feels slightly odd now to have written an article with such a basic explanation of “what cloud means” less than 6 years ago. Today it seems obvious that most people know the basics of cloud computing. But at the time I regularly had conversations with clients, prospects and others who had little or no understanding of what cloud computing meant. The paragraph about security reminds me of the “I’ll never use my credit card online” comments from a decade ago. And see how much that has changed? Nowadays most people are inclined to make purchases online, buying everything from airline tickets, to books, clothes and even their weekly supermarket shopping.

The user numbers for Xero and Saasu has grown even faster and further than expected – with their latest published figures for Australia having Xero at well over 200,000 users and Saasu 80,000 (and both those figures will be out of date by the time this blog post has been loaded!)

One current trend in cloud computing is the continuing “mainstreaming” of cloud software, with everyone from Microsoft, to large banks, government agencies and hundreds of thousands of SMEs adopting cloud solutions. The second notable trend is mobile cloud – in 2010 many of the solutions above were cloud hosted but most commonly accessed from a PC or a Mac. Today the majority of cloud apps are being designed for mobile access – tablets and mobile phones.

It is intriguing to speculate what the next 6 years will bring: continuing automation, more mobile, more ease of use, and more widespread adoption? Plus of course, somewhere out there is the next Google or Facebook. At least we know that the cloud world promises to be an exciting journey.
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