Cloud computing, in which data and applications are stored online and can be accessed from any physical location, has prompted a paradigm shift in business approach to IT infrastructure over the last few years. Now that cloud-based solutions are both commonly available and affordable, more and more businesses choose to store some amount of their data in the Cloud. This has lead to changes in IT security strategy, working patterns, the amount and style of collaboration which is possible, and new business models. By eliminating the need to build complex and expensive server infrastructure, cloud technology can shorten the execution time and lower the cost of launching a startup. Therefore, every entrepreneur should become familiar with the Cloud and leverage it effectively for her venture.

Benefits of cloud technology

Some of the clearest advantages for a business using cloud technology are improvements in the cost, flexibility, and scale of the work that it can perform. Anywhere access means that the data needed to perform work can be accessed from any place where an internet connection is available. Cloud computing makes it easy for employees to work on problems, together with their team, even if they are based off-site. For those who work in international organizations, who must travel as part of their job, or who work from home, this means that they can stay in contact with the key players and keep up to date with the status of work, even when they are not present in the office.

This leads to easier collaboration in work. Effective collaboration strategies provide document access across any endpoint, deepen connections with customers and partners and increase productivity. No longer is it necessary when, say, preparing a presentation, that one employee first writes a draft, then emails it to another worker who corrects it, then emails is to the head of another department for input, and so on. With cloud-based office suite software (such as Google Apps), the file for a presentation can be stored online, and all employees can access it at any time and make changes. This saves time, as multiple changes from multiple people or departments can happen simultaneously.

Another advantage of cloud technology is in simplified IT maintenance and reduced IT cost. Cloud providers (such as Amazon, Microsoft, IBM, or Google) handle all maintenance, upgrade, and support issues for both hardware and software. The business simply rents the total platform at costs that are significantly lower (often by orders of magnitude) than building and maintaining a similar infrastructure in-house. With Cloud technology you no longer need to make capital investments in purchasing and maintaining expensive servers and software licenses. Similarly, you do not need to hire a team of technology experts to administer your infrastructure, all that is done by the Cloud provider. With a Cloud solution, even small to midsize businesses can benefit from comprehensive data backup and disaster recovery processes that are made available by the service provider.

One further implication of cloud computing which is worth considering is the business opportunities it provides for new products and services. For example, the advent of high-speed internet is what enabled video streaming services like YouTube possible. For technology businesses with a vision, new business models and opportunities can be created with cloud services.

Drawbacks of cloud technology

There are some drawbacks to the rise of cloud computing; although most of them are being addressed and none of them is a reason to not use the cloud. One of the biggest issues for businesses using cloud computing is related security concerns. For example, several hundred usernames and passwords from the popular Dropbox cloud file storage system were leaked by an anonymous hacker. When you are running a business, transferring your data to the cloud means trusting your cloud services provider to be as considerate of your security as you are. A survey by communications company BT of IT decision makers found that 76% of them cited security as their main concern about using cloud services, and 49% were “very or extremely anxious” about the security implications of cloud computing. But a good cloud provider (such as Microsoft or Google) has much greater resources and ability to build robust security capabilities than an ordinary business organization who builds a similar infrastructure on its own. Therefore, security concerns should not be a reason to stay away from the cloud as long as you choose a good provider and implement good security practices. Anyone who uses a free email service such as gmail or Yahoo mail is already trusting the cloud for some of his or her most sensitive information.

It’s also important to consider data privacy concerns if you will be storing any of your customers’ data. If you store data on the cloud using an IT vendor, and there is an change which means that the storage is no longer in compliance with the laws around data privacy, then the legal responsibility falls on the business, not the cloud vendor. The key questions you need to ask to ensure your business is in compliance are: Where is my data held? How is it send to the cloud? And how secure is the storage on the cloud? You need to have answers to these questions, as you maintain responsibility for the protection of personal data, even when using services from a cloud vendor. Again, most good cloud vendors are very cognizant of this issue and address regulatory compliance proactively.

Other concerns around cloud computing include performance issues, as some cloud services can have issues with their services being slow or unreliable. When important data is only accessible from the cloud, you can only work as fast as the cloud’s network and your internet bandwidth will support. Although this is becoming less of a problem as internet connections become faster, you will need to make sure your staff can access your cloud system without performance delays, or you’ll be at risk of having your work disrupted by slow speed or reliability problems with your cloud services.

Advice for startups

While cloud technology is useful for virtually any business, it is especially valuable for startups which require all the help they can get to hit the ground running without incurring significant capital costs in building an in-house IT infrastructure. A cloud solution is cheaper, scalable, and can be more tuned to the collaborative and distributed workforce and customer-base of a startup. As with any other major decision, a business must evaluate the benefits and be prepared to address any risks and challenges cloud adoption brings.

Technology savvy countries such as Singapore are keenly aware of the enormous benefits of adopting cloud technology; Singapore is actively promoting it and helping businesses to address cyber security and data privacy issues by establishing relevant and sensible regulatory frameworks. To learn more about some of the benefits that Singapore offers for your next startup, see our Launch in Singapore section.