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Beware of the Cloud Bandwagon


Daniel Moisyeyev
Daniel Moisyeyev

The IT "Cloud" concept is pushed upon business owners from every angle. It seems that almost every digital service available nowadays - accounting packages, CRM, data storage, even fully functional out-of-the-box websites... is offered on a choice Cloud Platforms. Is there a reason why Cloud is becoming so popular? Are there drawbacks to this? Should you exercise control and reject some cloud services?

Why Cloud is Popular

Cloud Service Providers have not always been the only game in town. It's only recently they became really popular and trendy.

The basic premise of a cloud platform is that it offers a web-based or otherwise remote software solution (there are, however, some situations where fully functional desktop software is offered on subscription plans - e.g. Adobe Creative Cloud) on a lease plan. The developers of the cloud platform have invested a lot of funds into developing the best product possible, and as a business owner, you get all the functionality for an affordable monthly payment. The competition between Cloud Service Providers has also driven a race to the bottom in terms of pricing - for example, many Cloud Service Providers offer free plans or trial periods.

The upfront cost was a serious issue back in the day when you had to purchase software outright. This requirement to purchase software outright bred a lot of issues with piracy for traditional software development companies, and in turn this led to the eventual transformation of these companies into Cloud Service Providers. The piracy issue has been largely fixed.

In addition, the move to subscription-based digital services has led to improvements in convenience, ease of use and better customer support services.

The constant stream of subscription payments for a Cloud Service Provider is an easier business model to get a handle on, as compared to trying to sell software packages outright.

Renting your Software

Most people are of the notion that it is better to own than to rent (at least in Australia).

When you are signed up to a Cloud Platform, what you are doing is essentially renting the service. This may be a good choice in one situation, but a poor choice in another. Whenever you sign up to one of these services, you will need to judge whether the cost benefit outweighs the drawbacks such as the loss of control of your data, security issues and potential future vendor lock-in issues.

This article gives some particular examples as to using a Cloud Service Provider may be of benefit or a problem. Every business is different with varying needs - hence each situation needs to be assessed carefully before making a decision.

Types of Cloud Services to Use

1. Web Hosting Services
I have included this particular service as an example of where cloud platforms are highly beneficial and where you have no choice but to use a professional provider and pay a monthly fee.

You can technically run your own web server and host a website yourself with a modern high-speed internet connection. However, the time required to do this properly greatly outweighs the little cost savings you may receive.

In this case paying a provider is a much better choice. As a general practice, your web developer will assist with setting up a web hosting account for your business.

2. Email Marketing Platforms
Email Marketing is a crucial tool for any business. If you want to keep in touch with your customers using the least amount of resources, this is one of the most effective ways.

It is indeed possible to do email marketing on your own without the aid of a cloud Email Marketing Platform. However, you will need to invest into learning how to manually craft responsive HTML emails, find or design software to dispatch emails, configure your own email server, manage your own email database and offer a subscribe/unsubscribe facility compliant with legislative requirements such as Spam Act 2003. In other words, you will need to be a web developer and invest a lot of time to do this properly with good results.

Personally, I have chosen to do email marketing using my own tools and facilities. However, I would not recommend this approach except in some rare circumstances. There are plenty of platforms that offer these services for relatively low fees and deliver professional results.

To summarise, you can create excellent marketing emails yourself - but you will need to be a professional to do so. Don't DIY this part of your business and use one of the many Email Marketing Platforms available on the market. The other choice is to engage a professional to manage this for your business and execute campaigns on a regular basis.

3. Customer Relationship Management (CRM) Software
If your company is large enough, you will likely need to implement a CRM solution.

There are many software CRM packages you can obtain, install and manage on your own hardware. However, Cloud CRM providers do offer a lot of value - the out-of-the-box functionality and flexibility is hard to compete with. The costs of configuring a CRM system or custom building one (this may still be a viable choice for larger firms) generally exceed the benefits.

A CRM becomes a necessary requirement when your business or client database is sufficiently large.

Types of Cloud Services to Avoid

1. Cloud Data Storage Services
The reality is that most small business owners have a complete mess with their data and do not understand principles of back-ups and data redundancy.

Cloud Data Storage Services should really only be looked at as a remote data backup solution after a local data management system is already in place.

I am sure data recovery specialists and IT technicians have seen it all - it is not rare for small business operators to have the most important files stored on a 3-year old laptop that eventually one day fails to turn on (Murphy's law - "Anything that can go wrong will go wrong") and panic ensues.

Cloud Data Storage Services alone are not a replacement for proper data storage and management. If you do indeed value your business, you will need to invest in some kind of a Network Attached Storage (NAS) system, and organise Cloud Data Storage as a remote backup solution. Ideally you will need your files stored both on-site (i.e. at your premises) and off-site (i.e. remote backup).

There are obvious security issues with cloud data storage. Selecting a trusted provider is extremely important to safeguard your data from unauthorised access. These services can also be quite pricey as compared to other cloud services such as web hosting - leasing large amounts of disk space isn't cheap.

A cheap and easy solution for a small business operator is to simply back up your data to an external hard drive on a regular basis, and store it off-site.

2. Cloud Email Hosting
Cloud Email Hosting services became popular because of their convenience and ease of setting up. It is a more difficult affair to properly set up an own email server than it is to use one of these providers.

Cloud Email Hosting providers also offer easy-to-use web-based interfaces - which are actually much slower and have far less features than virtually any modern desktop email application. The web-based interfaces may be useful for accessing your emails on mobile devices and other odd environments, however they generally offer little benefits on a typical desktop workstation environment.

There are 3 major issues with cloud email hosting providers:

  1. Do you have a Plan B if you can't access your emails? After all, your email data is likely stored only on the provider servers and no local backup is made on a regular basis. If your provider cuts off access, you may be in serious trouble.
  2. Business emails contain personal and sensitive information. Is your data safe?
  3. If you already have a business website, you are likely paying for something that is already likely included in your web hosting package. Most web hosting plans include email hosting and there is no need to pay a Cloud Email Hosting provider unless you need to.
  4. SPAM Filters. While they may have been one of the biggest original benefits to moving to a cloud email hosting provider, they are now becoming an issue. SPAM Filters on major providers are now extremely overzealous and the conversation along the lines of "Your email went to SPAM" can be heard of on a daily basis. Genuine emails often simply don't get through and parties at both ends end up blaming each other as to why the messages are going to Junk folders. This issue is starting to become a bit controversial as some of these providers seem to let through messages from their own network with ease... while applying very harsh filtering to emails coming from properly configured third party email servers. Are these simply unfair competition practices and attempts to exert market dominance and get more business to their platforms? Perhaps we need to start looking at some of the biggest (they generally tend to be huge non-Australian corporations that play by their own rules) providers on this matter...

Unless you have a specific need for a particular Cloud Email Hosting Platform (such the ability /need to integrate additional services, e.g. a specific CRM package), my recommendation for a small business is to simply use the email hosting services that come with your typical web hosting package, or pay a professional to configure a Virtual Private Server (VPS) and host your own email server. While I was an advocate of Cloud Email Service Providers in the past for their convenience, the tide has changed in the last few years and I would definitely recommend running your own email hosting solution at this point.

3. DIY Website Builders
There a quite few of these offerings and they are often aggressively marketed as a cost saving measure to start up business owners. These providers offer a framework to build websites yourself and also take away the requirement for running a separate web hosting account.

While it may seem like a good option to save money for a start-up business owner at first glance, these platforms generally do not offer anything worthwhile except a choice of professionally designed templates. There are a lot of drawbacks and the platforms are largely unsuitable for anything but the most cookie cutter websites.

The websites built upon these frameworks do not offer anything special or unique. A tailor-website made by a professional web developer will almost always be superior in creativity, originality and attention detail, and most importantly, lead generation ability. Lead generation potential in a website is something that has to be specifically built after proper analysis of a particular industry and extensive planning - it is one of those important features that you can't just buy out-of-the-box.

Furthermore, it may seem like you are saving money by not paying for web hosting. Wrong. This "benefit" is actually a business practice in disguise called "proprietary lock" that almost all technology companies absolutely love and strive to achieve. You simply end up in a situation where you do not technically own or control your website and are completely dependent on the vendor.

In many cases the cost of using these platforms for basic projects is zero. Funnily enough, that is also the return on investment you can expect.


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