When Does IaaS Makes Sense for SMBs?

By their nature, small enterprises tend to run lean and mean. They have small workforces, and employees tend to perform a variety of tasks during the workweek. Small businesses also are usually dedicated to a core mission — selling a product or performing a service. They tend to have a skeletal IT staff, if they have one at all.

Because of these factors, small businesses often don’t have the expertise to run complex computer systems, ensure data backups are working properly, troubleshoot system malfunctions, or spend time provisioning new computing resources for users. The IaaS framework takes those mundane IT tasks out of the hands of these enterprises so they can focus on more strategic projects.

Cash flow is another reason why some small businesses turn to IaaS. Owning a computing infrastructure means buying, upgrading and maintaining equipment, as well as paying for IT staff to run it. With the pay-as-you-go utility model, organizations pay only for the capacity they use and don’t have to worry about service contracts or equipment purchases.

Small businesses also must work hard to react to market changes. Fast-changing requirements mean being able to stand up a system, create or troubleshoot a product, or get new employees up to speed quickly. That’s possible with an in-house infrastructure, but not without some fast thinking around repurposing and repositioning equipment.

Overcoming the Obstacles

With SaaS as a Path to IaaS small businesses interested in adopting cloud computing often start by moving one or more applications to the cloud. This option, called software as a service (SaaS), is so pervasive among small businesses that in its report on cloud computing last year, the IT association CompTIA found that nearly 70 percent are using some sort of SaaS.

The study, Third Annual Small and Medium Business Technology Adoption Trends, found that 97 percent of small- and mid-size businesses have put some operations in the cloud. Of those, 62 percent used e-mail services in the cloud, followed by document management, collaboration and customer resource management (CRM).

For many small businesses, SaaS is the easiest route to the cloud, because it involves moving only selected applications to the cloud while retaining the rest of the IT infrastructure in house. What’s more, it tends to save organizations money because, like IaaS, it is a utility-based, pay-as-you-go model. Once organizations are comfortable with the SaaS model, many dip another toe in the water by moving commoditytype infrastructure services (such as data backup) or services that straddle the line between SaaS and IaaS (such security as a service) to the cloud.

Once these have proved efficient, economical and secure, enterprises are ready to move more infrastructure to the cloud. With infrastructure in the cloud, the capacity is always there when they need it. It makes sense to consider IaaS when an organization is due for a complete refresh or overhaul of the data center. That’s the time to consider if it makes sense to continue managing the organization’s own data center. Is that the best use of salaried employees?

If an organization is not in the IT business, chances are good that it may not be in its best interest to spend the money on new infrastructure. Saving money is a popular reason for moving to IaaS — or any type of cloud computing. But depending on the situation, that may not always be the case. It’s worth taking the time to do a complete cost/benefit analysis.

That means considering every angle — the money an enterprise would save by not buying, maintaining and upgrading its own equipment, as well as the cost of the labor used to manage an internal infrastructure. Those are the hard costs, and they are fairly easy to quantify. The bigger issue is determining the soft costs. For example, if an organization is anticipating significant growth but can’t be sure how much computing capacity it will need, it’s difficult to run the numbers.

However, just knowing that it is entering a major growth stage is good information for a total-cost-of-ownership (TCO) calculation. Because IaaS can be scaled up or down quickly, it’s not as important to know how much the organization will grow as it is to know that it will grow significantly. But perhaps the most difficult costs to determine are “missed opportunity” costs, as Laurie McCabe, a partner at SMB Group, calls them. In other words, if an enterprise can operate faster and better using an external IaaS provider, will it gain some type of business advantage that it currently can’t imagine?

For more information on the benefits of IaaS, read this CDW white paper.