Cloud computing for SMEs

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John Hope-Bailie, technical director of Demand Data
Cloud computing, sometimes described as ‘Internet Computing’, is a fast-growing trend towards the sharing of applications, software and other IT resources by companies on an on-demand basis.

Cloud-based service providers supply these resources in the same way as public utility companies supply electricity or water to consumers and then bill for the quantities used.

An increasing number of small to medium sized enterprises (SMEs) are getting to grips with the technology in South Africa because of its ability to cut costs and reduce the need for capital equipment – both hardware and software.

Despite an incorrectly perceived level of complexity, it is mostly common business applications that are provided, all of which are easily accessed from a web browser.


Cloud computing is defined by three characteristics:

1. Services are sold on demand, typically on a monthly or annual basis. Payments are made either as a utility (similar to an electricity bill) or as a subscription.

2. Services are flexible. A user can have varying amounts of the service – at any time.

3. Services are fully managed by the provider, with the user requiring little more than a PC and Internet access to get started.

The offerings available in the cloud environment have been categorised as Software as a Service (SaaS), Infrastructure as a Service (IaaS), and Platform as a Service (PaaS).

SaaS is the broadest market. Through SaaS, companies can access applications and large amounts of virtual computing power without buying it, dramatically cutting setup and maintenance costs. These applications can be anything from data storage solutions and web based email, to Facebook and Twitter-type social networking.

IaaS is an evolution of web hosting and virtual private server offerings. It represents the delivery of computer infrastructure as a service. Rather than purchase servers, data centre space or network equipment, clients instead buy these virtualised resources as a fully outsourced service.

PaaS is a set of software and development tools hosted on the service provider’s servers. Developers can create applications using the provider’s application programming interfaces (APIs). Google Apps is one of the most popular Platform-as-a-Service providers.

One of the advantages of the cloud computing model for SMEs is its low barrier to entry. Risks are limited as contracts with service providers are often covered by service level agreements and – should the worst scenario play out – they can be cancelled at any time.

Cloud computing supporters believe the technology will simplify business processes for SMEs, at the same time adding value to software applications and lowering costs by moving the epicentre of IT applications outside the confines of traditional businesses.

They also expect cloud computing to help SMEs provide more cost-effective services to their customers, improving efficiencies in the process.

One of the major variables when opting for a cloud computing solution is performance. Users may have a performance level in mind that could be exceeded – or not – depending on any number of criteria, mainly associated with capacity levels at the service provider or the bandwidth available at a particular user site.

When looking at cloud computing options, users should have a clear idea of what their tolerance level would be for latency – and establish whether the service provider is able to regularly, reliably and contractually meet this benchmark with the infrastructure at his disposal.

John Hope-Bailie, technical director of Demand Data