Small firms can capitalise on the cloud computing curve

26 Jan 2011

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Ciaran Treanor, technology director, DANU Technologies, outlines why SMEs, specifically start-ups, can significantly reduce IT spend by accessing IT resources on demand via the cloud.

Treanor was one of the speakers at last week’s cloud computing event hosted by The Institution of Engineering and Technology (IET) (Ireland) at Trinity College Dublin, which aimed to inform people what the cloud has to offer start-ups and small enterprises, especially those in the non-IT space that may be just learning about the cloud computing phenomenon.

The IET talk was timely, particularly following the release of Monday’s economic impact study – Ireland’s Competitiveness & Jobs Opportunity: Cloud Computing – which has identified that Ireland has the potential to capture a large share of the cloud-computing industry, estimated to be worth €40bn worldwide, by 2014.

This report also identified how the benefits of cloud computing need to be communicated clearly to small businesses and start-ups.

It said Ireland is in with a chance of reaching cloud computing sales of €9.5bn per year by 2014, resulting in 8,600 new jobs.

Seed capital and IT infrastructure

While, up to recently, technology start-ups would have spent a significant proportion of their seed capital on IT infrastructure, Treanor says it’s about making people aware of how cloud computing can reduce that initial IT spend so that funds can be diverted elsewhere during this crucial phase.

Treanor says it often happens that websites have fluctuating levels of traffic throughout the year, with peaks and troughs.

“The hardware is then sitting underutilised most of the time. So you’ve got a hardware investment that’s over-provisioned for normal traffic levels. Wouldn’t it be good to be able to ratchet up that ‘horsepower’ as you need it and then ratchet it down during quieter times? Cloud computing is a way of allowing that to happen.”

Cloud computing revolution

How cloud computing can make financial sense, particularly in the start-up sphere. Microsoft Ireland commissioned Goodbody Economic Consultants to compile a report entitled Ireland’s Competitiveness and Jobs Opportunity: Cloud Computing, which was released earlier this week. It posits how Ireland has the opportunity to create jobs and help restore competitiveness if we move quickly to establish Ireland as a global cloud computing centre of excellence.

Access to computing power on tap – SMEs

All small companies, irrespective of whether they are IT houses or not, have a certain amount of IT infrastructure, for example, CRM systems, explains Treanor.

“Traditionally, that infrastructure would have been in a server room or a data centre, but there’s an opportunity for SMEs to take a different approach to things. For example, there are numerous hosted email providers out there that will host email for you. Fewer companies now need to have a mail server sitting on their premises.”

So, he says there’s an opportunity to push the internal hosted IT services up into the cloud.

“In doing so, you reduce your costs in terms of management and maintenance while potentially reducing office space requirements.

“There are economies of scale here. Cloud providers are constantly driving down the costs of their service and are innovating and performing upgrades automatically – so you are saving costs there.

Security concerns

Treanor says companies may have some concerns, primarily around security, but these are being addressed by cloud vendors through adherence to internationally recognised security and audit standards.

“The other primary fear is availability – ‘what happens if my cloud provider goes down and I can’t access my server?’.”

Again, he says cloud providers are striving to allay those fears. For instance, Google announced last week that its uptime on Gmail was 99.984pc in 2010.

“Within small businesses it takes a lot of effort and cost to ensure that, if you are running these services yourself, you achieve uptime numbers like that,” says Treanor.

“While there may be a sense that you are ‘losing control’, I think companies are getting to the point where they see the benefits outweigh the concerns they might have.

So, where is the cloud going?

“I think it’s more a case of where are companies going,” says Treanor. “There’s a cloud landscape out there with a number of large players. To some degree, companies are just dipping their toes in the water. Over the next few years, we are going to see a sea change where it won’t be a case of ‘why should we?’ but instead a case of ‘why aren’t we?’ putting our systems in the cloud.

“I think start-ups are open to the idea, as they want to make the best use of their investment capital. Companies will become more accepting that it is a very economical way of going about their business,” he affirms.

DANU Technologies itself was formerly part of CAPE Technologies, which was founded in 2000. CAPE sold its Revenue Assurance division in 2007, and rebranded the consulting division as DANU. Today DANU continues to develop software solutions for telecom operators. Recently, DANU has expanded to become a partner of BMC Software. Treanor was one of the original team members at CAPE Technologies, occupying various senior management roles.

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Carmel was a long-time reporter with Siliconrepublic.com

editorial@siliconrepublic.com