Recently, I had a client call and ask to have some changes made to their system. When I asked what they were doing, they explained that they had decided to go with a hosting company and forego the upgrades to their computer network and file server at their office. The client had been approached by a salesperson from a hosting company who sold them on the idea to spend hundreds of dollars a month for a hosted environment instead of paying thousands of dollars to install a new file server and related equipment. The idea was to move everything to the cloud.
Well, I agree that spending only a few hundred dollars a month sounds a lot better than spending thousands. The problem is, it won’t work! This client uses several software applications in addition to Microsoft (MS) Word, MS Excel, and MS Outlook in their business. None of their software applications are supported by the software manufacturers in a hosted environment. The only realistic functionality of the proposed hosted environment would be for their Word and Excel documents and their email. So, they would still need their file server for their other software applications. The salesperson had not considered this and was basically going after the “quick sale,” rather than thinking about the appropriate solution. If they had proceeded to move all of their data and software applications, they would have had a huge mess. Their business would have come to a screeching halt.
You cannot watch television or read a magazine or a newspaper article without hearing about or reading about “the cloud” or “cloud computing.” What is it? Cloud computing is the concept of hosting your software and data files via the Internet. The “cloud” is a metaphor for the Internet and typically when the Internet is depicted in diagrams, it is represented by the picture of a cloud.
Cloud computing is “the” hot term in the IT industry right now. You may have even heard about cloud computing in the seminars you attend for CLE credits. Companies everywhere are trying to see how they can cash in. You may have already received sales calls offering you hosting for your files by Internet based companies. But, what does this all mean, how does it affect your business, and what will the real costs be to a small business owner?
Cloud computing is the idea that the software that you use, along with your data, will be hosted by an Internet company and accessed via the Internet. No more worries about file servers in your office, tape backups, hard drive space, and more. Sounds great, right? Well, it does sound great, but the IT industry is quite a ways off from being able to accomplish this. Cloud computing is in the infancy stages and most of the software applications you use are not ready to be hosted.
Software manufacturers are all working on web-based software applications and plan to have online offerings within the next few years. Stop and think about this for a moment, because it really is going to be costly for the small business owner. Let’s use an example of a law firm that uses Timeslips Software for time billing, QuickBooks Software for accounting, Time Matters for practice management, SupportCalc, Microsoft Office, Dictation software, and Adobe Standard software. Each software manufacturer will have an online offering for their software. You will pay either per user login, by the number of records you have, or by the amount of data you store. There will also be a hosting company that you will pay to host your email and to host your word processing documents, spreadsheets, and pdf files. You will pay each and every manufacturer to use their software via the cloud. Let’s quantify this example with some numbers. If each software program charged $15 per month per user, then for one user the cost would be approximately $70 per month. If there were five users in the office, then the cost would be $450 per month or $5400 per year. If there were ten users in the office, then the cost would be $700 per month or $8400 per year. Remember, you would still need a pc for each user with antivirus software to access the Internet, along with a really fast high speed Internet connection. Hopefully, this analysis provides you a new perspective to what the real costs are going to be to the small business owner to move everything to the cloud!
Published in the December 2010 issue of Pennsylvania Family Lawyer.