I recently had a conversation with a friend about
cloud computing, and he said he didn’t like it because it was just like leasing. He saw it as fiscally irresponsible not to own something that you would invest so much money in. Why pour money into something I’m never going to own?
What my friend failed to see was the huge financial risk he brought on himself by owning his own hardware.
Every small business owner or operator makes decisions every day. Those decisions concern the risks associated with certain activities or operations. For example, we hire attorneys to give us advice to mitigate our risk in hiring and firing, contract language used in client relations and general business transactions.
You buy homeowner’s insurance to mitigate the risk of that frozen pipe in the middle of the winter or leaving for vacation and realizing one of the kids left the sink running and your home is flooded. The insurance company bears the financial burden, the risk, of those possibilities. In this sense, cloud computing is like insurance for your business.
Shifting IT operations and ownership to a cloud provider relieves the business owner from all liability, financial burden and risk associated with IT. In the traditional hardware ownership model we have not mitigated our risk, and the company bears 100% of that burden.
So with something as crucial – and full of liability – to your business as all the expensive hardware involved in your company’s information technology, how do you feel about owning all the risks that come with your hardware?
Leasing hardware is a good way to facilitate utility based services and carries significant financial advantages. But it still fails to remove the risk of IT from your business.
In the traditional IT or computer support model, the IT guys procure servers, licensing, anti-virus, firewalls, backups – all the components that allow you to build your small business IT network. Then it’s moved to a monthly expense, a lease to ease the overhead/cash burden from off the business.
In the cloud computing model, we accomplish the same things, except your risk is gone and your provider guarantees IT will work. To fully mitigate your risks, you should expect a few things from your cloud provider:
· Service Level Agreements (service response times guaranteed)
· 99% or better uptime (your network will always be accessible to you and your employees)
· On-demand, fully scalable server network
So when evaluating your IT options, it’s essential to not confuse “leasing” with the cloud provided option - the key differentiator is risk.