Cloud Computing for SMEs What You Need to Know (Part I)

Small and medium-sized companies can no longer do without an appropriate IT department. Numerous business processes have now been digitized. This not only applies to companies in the service sector, but also to manufacturing companies and craft businesses. The most important digital processes include:

  • Purchase of materials
  • Warehouse logistics
  • Human resource management
  • Production or sales processes
  • sale
  • Customer care
  • documentation
  • communication

Depending on the operational structure, there are numerous other processes that run in digital form in the individual companies. That is why a functioning and secure IT infrastructure is now of fundamental importance. Since the demands are constantly increasing and are changing, many companies are already thinking about outsourcing the IT department and IT services – the term cloud computing is often used here. However, there are still doubts in many places as to whether using the cloud is the right way to go. Therefore, the advantages and disadvantages of this new option should be described in more detail.

IT outsourcing?

Every company not only needs a well-equipped IT department, but also the corresponding hardware and the entire IT infrastructure.

There must be servers that also require a high level of maintenance and care. In addition, software is required that should also be kept up-to-date in order to be protected against potential security incidents, among other things. At some point, both new servers and new software will be required. The costs for this can quickly become substantial. You might be wondering whether (partial) outsourcing of IT services isn’t the better choice after all. There are various providers available. The best known include:

  • Microsoft 365
  • Amazon Web Services
  • Google Cloud

With the somewhat less well-known providers, the services are very similar, so that there are no major differences. However, great caution is required with completely unknown providers! They sometimes offer huge data storage media at bargain prices – that sounds tempting, but there is a risk that the servers will no longer be state-of-the-art. This then not only means uncertainties regarding data protection, but also lower performance. Under certain circumstances, this can lead to considerable problems in day-to-day work. But first it should be described what cloud computing actually is.

This is how working in the cloud works

A cloud is actually nothing more than a storage space or server.

This is made available by the providers in their own data centers and can only be accessed via the Internet. The data stores are located at large server locations. These are often available worldwide and can therefore also be found in almost all countries. The user therefore stores his data in memories that are sometimes in foreign countries. Of course, not every entrepreneur likes this idea. For many people it is an uncomfortable feeling when the customer and personal data are no longer stored in their own company building. So many questions arise:

  • Where is the data located?
  • Can you access it at any time?
  • Who has access to the data?
  • Is the data in the cloud even safe?
  • Are there any problems with the GDPR?

All of these questions will be answered in the following sections. First of all, there is the question of where the operational data is located. Most providers come from the USA, but they operate server locations in Europe and also in Germany. You should also pay attention to this when choosing the provider:

Reputable providers willingly provide information about where the server locations are.

It is always advantageous to choose a provider who operates server locations in geographical proximity. Basically, the server location shouldn’t have an impact on the speed of data transmission because the data is moving at the speed of light anyway. In practice, however, it has been shown that nearby server locations have a positive effect on data speed. This is because the data streams do not have to be routed over countless interfaces. As a user, you will notice this if, for example, the download of a file or presentation takes a long time.

All that is required to work directly in a cloud is a web browser. The data stored on the home servers are transported to the cloud storage via the Internet and can be called up again at any time. However, cloud computing does not only include the storage of data. It offers a lot more.

Use applications from the cloud

Most cloud providers also offer what is known as “Software as a Service” (SaaS). This means that apps that can be used for daily office work are located directly in the rented cloud storage. These are word processing, spreadsheets, presentation creation and much more. To call up the individual applications, the user only needs to log into the system using a web browser. The apps are then executed directly in the browser. The entered data is saved in real time on the cloud storage.

There is therefore no longer a save button in the web applications. Every entry is saved directly.

Therefore, no more data is lost if the PC crashes or there is a sudden power failure. In addition, it is possible to work from any place and with any conceivable device. If the user logs into his cloud with an internet-enabled device, he can continue working where he left off before. Synchronization with local applications such as Excel or Word is usually also possible.

Special advantages of a cloud for SMEs

The cost factor is always of particular importance for small and medium-sized companies. An IT department with the appropriate equipment costs a lot of money. Not only the acquisition, but also the operation of the IT sometimes causes immense costs. Outsourcing can therefore offer a very good alternative. The switch to modern cloud computing should definitely be seriously considered if new hardware or software has to be purchased anyway.

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The connection of a company to the cloud initially requires a certain amount of effort. However, once all data has been migrated, the effort is reduced enormously. You don’t have to worry about updates, backups or data backups again. The cloud systems are always updated by the providers. In the long run, you may be able to downsize your entire IT department. This saves you costs for personnel, hardware and software as well as for energy and operating costs. Of course, using the cloud also costs something. Therefore, it makes sense to weigh the costs against each other.

What about IT security?

Since the operational data is no longer hosted on the servers within the company building, many interested parties have concerns about security. But the all-clear can be given in this area. Serious cloud services offer end-to-end encryption. Before being transferred to the server, the data on the PC is encrypted and only then transferred to the server. If someone tries to access the data while it is being transferred, they will not be able to do anything with them. Decrypting the data would take decades.

The data also remains encrypted on the servers. Therefore, the employees in the server locations do not have an insight into the stored data. There are no options for decrypting the data. When they are transferred back to the PC, they also remain encrypted and are only decrypted when the user has logged in with his access data and password. The use of multi-factor authentication is also possible and even desired.

There is also hardly any possibility that the servers can be attacked by viruses or other malware.

The operators are professionals and secure everything in the best possible way. In the server locations, the company data is better protected against attacks than on home PCs or on the company’s own servers. This is also an important advantage that the cloud solution offers.

Is data loss conceivable?

The data is safe in the cloud. The providers always save several versions (keyword: redundancy) at the same time. If a server fails or if it has to be serviced, there is no risk that you will no longer be able to access your data in the cloud. There is at least one copy of your data at the respective server location. In addition, data is saved at a second location at any time. If a fire breaks out, water damage or anything else happens in the building where the servers are located, the data is always backed up at another location. As a result, there is virtually no risk of data being irrevocably lost.

Even modern servers have to be replaced at some point. This work and all other maintenance work succeed without the user noticing anything.

All reputable cloud providers guarantee almost 100 percent availability of the data.

Is cloud computing suitable for every company?

Outsourcing the entire data infrastructure to the cloud is not suitable for every company. For some companies, such a step would not even be possible for reasons of data protection. There are companies that have to provide precise information about where they store their data at any time. This is especially true for companies that process very sensitive data. If the data is stored in a cloud, the location is known, but the exact storage position on the respective server is never known – collecting the information can take time and an ad hoc response is not possible.

Furthermore, the use of a cloud is not suitable for companies that do not have a good feeling about outsourcing data. The data is safe in the cloud, but some operations managers have serious concerns about it. In such a case, an on-premises solution should be considered.

At this point, it should also be pointed out that it is not always necessary to relocate a company’s entire IT to the cloud. For example, important company data can remain on your own servers. However, all communication can be handled much better with a cloud-based system. The following scenarios in particular are conceivable in this area:

  • Online conferences
  • presentations
  • Online training

If, for example, new production processes are established in a company, it is easy to inform employees in other production facilities about them via a cloud-based video chat. The presentations or training sessions can also be recorded so that employees in remote branch offices can view them at any time. This is a huge advantage if the individual locations are in regions with different time zones. Since communication and presentation is possible worldwide at any time, companies also save travel costs.

If such requirements do not exist in the company, then such services are not absolutely necessary. It would of course be fatal to opt for a cloud solution just because this method is currently in vogue.

All operations managers should decide for themselves whether cloud computing is the best solution for their operations.

However, it does not hurt to find out about these versatile possibilities from time to time. Cloud computing is certainly not a short-term hype. The cloud-based IT solutions are becoming increasingly important and are already an integral part of many companies, and the trend is rising.

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