Advantages of Cloud Computing for Smes

Topics: Cloud computing, Operating expense, Capital expenditure Pages: 5 (1598 words) Published: February 12, 2012
The advantages of Cloud Computing to a small to medium size enterprise

Leyla Evloeva

Department of Business
School of Business & Humanities
Institute of Technology, Blanchardstown
Dublin 15

Word Limit for Assignment:1500Actual count:1533

Bachelor of Business
General Business

Table of Contents
1 Executive Summary2
2 Introduction2
3 Competitive Advantages3
3.1 Reduce Cost3
3.2 Pay per Use3
3.3 Meets Organizational Requirements4
3.4 Security and Privacy Issues4
3.5 Collaborative Environment4
4 Reference List5

1 Executive Summary
The purpose of this report is to understand the advantages of Cloud Computing for the small and medium enterprise (SMEs) and to describe the impact these benefits might have on small and medium-sized businesses. Several attempts were made to find relevant literature on the topic in ITB Emerald Fulltext Databased. Unfortunately, these attempts were not of any success. Thus, this paper is mainly resting on a general overview of a number of Internet sources relevant to the topic and illustrating how Cloud Computing can become a driving force behind various organisational areas of SMEs. It has been observed, that today, the major advantages of cloud computing in terms of SMEs lie in the economic field. 2 Introduction

Cloud technology has opened up vast opportunities for Small and Medium Enterprises (SME) that previously were available only to large companies. For example, Google CEO Eric Schmidt said during his speech at the TechCrunch Disrupt Conference: “Twenty years ago when you were setting up a small business, you had to go and buy a personal computer or a small server … and you had to have an IT professional and you had to run it in-house. The right thing for a small business to do now is to not have any computers except the things, which are on people’s desktops and on their smart phones … and do everything in the cloud." [ (htt1) ] Cloud computing is no longer about simply acquiring access to the web. Over the course of time this type of technology solution has rapidly been developing into a more efficient way of doing business. Today, the number of European SME implementing cloud technologies has drastically increased, because more and more companies are realizing the tangible benefits that come with cloud computing. "The European IT sector includes tens of thousands of SMEs, including thousands of start up companies. These SMEs are the engine of economic growth in Europe. According to studies by IDC, the European Union’s IT sector in 2010 employs close to 8 million people of which 99% are working in small to medium sized enterprises. Jobs in the SME IT sector are expected to grow at a faster rate than total employment over the period of 2009 – 2014, and this sector should stimulate over 550,000 new jobs." [ (htt2) ] Hence cloud computing can be described a powerful tool for their: basis of competitive advantage ways of meeting organizational requirements method of solving privacy and security issues collaborative environment approach. Since, SME can't usually afford a large IT department or staff, cloud computing could be the answer to many of their business challenges or problems.

3 Competitive Advantages
Most SME companies do not have a very large budget to buy multiple software solutions. On the cloud computing can help the SME reach the advantageous benefits of technology without additional expenses of their budgets for the important technology investment. Turn CAPEX into OPEX. Cloud-based products enable IT solutions to be rented rather than buying a permanent license. In other words, the cost of IT infrastructure of the area of capital expenditure (CAPEX) is transformed into operational (OPEX). "... these days, cost savings might be the number-one trigger. By its nature, cloud reduces the need for capital expenditures (CAPEX), by allowing organizations to “rent” access to hosted assets on an...
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