Why Are Small Businesses Embracing Cloud Computing?

In 2015 the percentage of small businesses in the United States, Canada, the U.K., and Australia  that ran their operations in the cloud was 37 percentage. Only a year later an Intuit study reveals that the number has grown significantly - to 64 percent. In addition, 68 percent of these same small businesses use mobile or web-based apps in their day-to-day operations. A few years ago in 2014, Intuit predicted that by 2020, 80 percent of small businesses will have embraced cloud computing. This is an amazing shift in the way small business is being done, and it’s occurring practically overnight.

Of course, what small business owners are concerned about now is what they’ve always been concerned about: controlling costs and increasing productivity. So why are they embracing cloud computing and apps?

Cloud computing fully utilizes hardware, and businesses can therefore do more with less of it. This means that companies have pay less money to buy, install, maintain, upgrade, and fix their on-site computers and servers. They also will have lower electric bills because they will not have to power all of the equipment they had to before cloud computing. For a small business like a family dentist, eliminating the headache of any unnecessary on-site IT - while simultaneously backing up records off-site - is worth it.

Collaboration is also much easier in the cloud. Take Google docs, for instance. Any number of employees can easily access and edit a single document without having to purchase compatible software or hardware. They can also access them wherever they are - as long as they have access to a computer or device and wifi. Easy, universal access to documents allows small businesses more flexibility. It’s possible to run a small business without renting physical space now since employees can and do work from home or wherever they are comfortable and productive. That can mean enormous cost savings and completely eliminated barriers to entry.

What are some reasons that some small business owners are avoiding employing apps? There are a number. First of all, there are so many apps available, that many people feel unsure of which ones work well and best meet their needs. Secondly, there’s the cost. In the previous small-business model,  software was an upfront cost. After the company purchased it, it could be used as much as and for as long as desired. Adopting cloud computing and apps means having to pay multiple monthly or otherwise regular fees that may go up over time. Also, once businesses make the switch to a specific service, they may feel like important aspects of their operations are held hostage to outside services over which they have neither control nor input.

Finally, companies want the apps they use to be simple and easy to use. The business landscape is still made up of at least three generations of people. Those people are not equally comfortable with computers, mobile devices, or apps.

Still, most business owners must feel the advantages far outweigh the disadvantages because the speed with which this change is happening is startling. When most of business is cloud dependent, this may have additional ramifications for how and where business is done.

Millenials and Entrepreneurship

Here is Alexis Ohanian, co-founder of Reddit, being interviewed about Millennials, opportunities for start ups, and the sudden burgeoning of entrepreneurship among young people.  This blog has covered before the situation young people are in coping with the present bad economy. Ohanian point, that the lack of economic opportunities means that there's no opportunity cost for entrepreneurship, and that this is the silver lining in our economic cloud is an interesting one. He also points out that the barriers for entry into business have never been lower because of increased access to consumers and open source software.

Michigan Future, Inc. put out a report several years ago with the purpose of attracting knowledge workers to Detroit and thereby encouraging the revitalization of downtown Detroit. Their "knowledge workers" are Ohanian's audience as well - young, very bright, creative, willing to work hard and take risks. In the past they've gone where the jobs are and taken their energy and drive with them, reducing the fortunes of smaller cities already on a downward spiral and enriching larger cities with, arguably, enough knowledge capital. Now, however, with good jobs hard to find nationally, they have incentive to stay where they are and build their own opportunities.

The less fortunate part of this is that knowledge workers - people who can create with "a laptop and an internet connection" are only a small subset of the general population. Most would be small business entrepreneurs still need some capital to get started. Even if you have the knowledge to build a parts washer to spotlessly clean engine liners, you can't do it without investment capital. While some small businesses can be run from home, manufacturing plants, auto garages, medical care centers, and organic farms, to name but a few, cannot, and those are the businesses who will hire workers who are not knowledge workers but still need employment. The economy won't get better until there are jobs available to the average worker, not just the specialty one.

It is, however, a blessing for very bright people who don't want to move away from their communities to find their livelihoods. And, eventually, many knowledge workers do generate jobs from their risk taking. Reddit only has 28 employees, but Ohanian has other projects that fund average people looking for a break.  It's not an overall solution to the nation's economic problems, but for those people he's helped get exposure and funds it's been life changing. We need to see more of this virtuous cycle of economic activity.