Small Business Labs

Cloud Computing and Small Business HR

Performance and talent management solutions company Successfactors has released a new version of their talent management suite for small and mid-sized businesses.  It is designed for organizations with fewer than 500 employees and includes applications for managing goals, performance reviews, compensation, etc.

Successfactors is a cloud computing solutions company.  This means the application is accessed across the Internet and is hosted by Successfactors.  For small companies and entrepreneurs, cloud computing provides an opportunity to access enterprise applications on an outsourced, variable cost basis.  This reduces capital costs and IT support requirements.  It also lets small businesses purchase exactly the amount of computing and data resources required.  The result is a more agile small business that can scale up and down based on demand. 

Successfactor customers include both large and small companies.  They also told me they have a growing non-profit client list.  Given that there are 1.4 million non-profits in the US, I'm not surprised. 

Successfactors is another example of cloud computing - also called software as a service (SaaS) and utility computing - leveling the IT playing field between big and small companies.  Many small firms struggle with their review and compensation processes.  Cloud solutions like Successfactors can cost effectively help small businesses in this key area.   

The Connection Between Mobile and Cloud Computing

Last week I spent a day at a large corporation's internal mobile marketing workshop.  At the workshop one of the topics was the future of mobile marketing and mobile commerce.  We spent a lot of time talking about mobile computing form factors, new display technologies, software standards, advertising formats and more powerful mobile chipsets.  We also talked a lot about the iPhone and its impact on mobile computing.

We didn't talk much about cloud computing, but thinking about the day we should have.  I agree that the iPhone fundamentally changed cell phone design for the better.  But I also think the fixed cost data plan, although expensive, is a key reason for the iPhone success.  Combined with the iPhone's very nice mobile browser and UI, the fixed cost data plan allows users full cloud access for zero marginal cost.  This is a major reason why iPhone users use the Internet so much. 

The NY Times also points to cloud access as one reason why Amazon's Kindle may be the first successful digital, portable electronic reader.  Key quote:

"books and other content can be loaded wirelessly, from just about anywhere in the United States, using the high-speed EVDO network from Sprint.

This may turn out to be a red-letter day in the history of convenience — our age’s equivalent of that magical moment FedEx introduced next-day delivery and people asked, “How was life possible before this?”"

Going forward other cell phone and mobile device makers will copy and even enhance many of Apple's design innovations.  This will definitely improve mobile computing.  But as the cloud gets more powerful, network bandwidth expands, and data access gets cheaper, the mobile form factor will be increasingly focused on UI and ease of use.  Local storage and processor power will become increasingly less important because data and computations will reside elsewhere. 

Apple's new Air seems to anticipate this world.  It is a mobile device that assumes your data and information are accessible through the cloud.  Making that assumption allowed Apple to create a really thin notebook and a really cool user experience. 

These are two self-reinforcing trends.  The better the cloud the better the mobile computing experience - and vice versa.  Google, Apple and Amazon seem to see this, and all are designing products for a combined mobile/cloud world.

Small businesses need to keep up with both mobile and cloud computing.  Important in their own right, together they will drive the adoption of location based services. 

The Big Switch, Utility Computing and Small Business

Nicolas Carr, who is probably best known for his controversial 2003 Harvard Business Review article "Does IT Matter", has written a book on utility computing called The Big Switch.  Also called cloud computing, on-demand computing and software as a service, utility computing exists when the user accesses software and/or data from computing resources located on the network.  Gmail from Google is an example of utility computing. 

Carr compares the rise of cloud computing to the impact electric power generation had.  Key quote from the book cover:

"A hundred years ago, companies stopped generating their own power with steam engines and dynamos and plugged into the newly built electric grid. The cheap power pumped out by electric utilities didn’t just change how businesses operate. It set off a chain reaction of economic and social transformations that brought the modern world into existence. Today, a similar revolution is under way. Hooked up to the Internet’s global computing grid, massive information-processing plants have begun pumping data and software code into our homes and businesses. This time, it’s computing that’s turning into a utility."

We've posted in the past on the impact of cloud computing on small business.  Carr's book does a great job of explaining this shift. 

Cloud Computing and Small Business

Business Week's recent cover story article is on Google and Cloud Computing.  The article discusses Google's plan to allow users to directly access and use their enormous computer server farms and databases directly.  Key quote on small business:

"For small companies and entrepreneurs, clouds mean opportunity—a leveling of the playing field in the most data-intensive forms of computing."

Google is hardly the first company to do this. Cloud computing dates back to the early days of computing when computers were accessed across networks in a computing form called "timesharing". 

More recently, Amazon's Web Services program has been in place for several years and allows third parties to access and use Amazon's computing infrastructure across the Internet.  Amazon has thousands of small business customers for their cloud services.  Also, "software as a service" companies like Salesforce.com have been pushing this concept for years. 

For small businesses cloud computing not only provides access to world class computing infrastructures and large scale databases, it does this on an outsourced, variable cost basis.  This reduces capital costs and IT support requirements.  It also lets small businesses purchase exactly the amount of computing and data resources required.  The result is a more agile small business that can easily and quickly scale up and down based on demand. 

While cloud computing is getting a lot of press these days, business infrastructure in general is moving to the "cloud".  This shift is creating vast new opportunities for small business and is a topic that we will cover in more detail in our next forecast report.

For more on software as service see Anita Campbell's recent post on the topic on Small Business Trends.  Also, this weekend's New York Times has a good article describing how Google is using cloud computing to go after Microsoft Office.