The cloud is just starting to impact small business

As small companies get bigger, cloud-provided agility will let them outpace traditional competitors

I took part in a talk yesterday at St. Louis University on cloud computing and small business -- specifically, its benefits.

Clearly, cloud computing is having the largest impact on small business. We've all heard the stories about startups that set up their supporting IT infrastructure for a fraction of what it cost a few years ago, just by leveraging the cloud.

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However, the impact of the movement to cloud computing by small business won't really be felt until those businesses grow up. While it's not unusual to find a startup using development, accounting, and sales management resources from the cloud, that kind of usage is only interesting when it's in the service of less than 50 employees. But when a company has more than 5,000 employees, it's downright disruptive.

Some smaller companies have the luxury of not having existing legacy systems to consider, so they've been able to use cloud computing as an IT option from the beginning; these companies, as they grow, could have the cloud serving as much as 75 percent of their IT requirements as they approach $1 billion in revenue.

But I don't believe that we'll have today's medium-size to large companies running on just "the cloud." In fact, if you find cloud usage exceeding 1 percent within the Global 2000 -- or the government -- it should be headline news. Larger organizations are currently kicking the cloud computing tires, and I suspect their adoption will be very slow.

What does this mean for business? If I'm using cloud computing, my capital costs and, thus, my risks are typically going to be much lower. Moreover, my ability to adjust my IT assets in alignment with new and emerging markets is going to give me a strategic advantage. Finally, my ability to acquire other businesses is enhanced as well. In other words, I'm lean and mean, while similar companies using more traditional approaches to IT won't have the same strategic advantages. That could be a game-changer.

But we're not there -- yet. Those companies using cloud computing as their primary architecture are typically very small, though they're growing rapidly. As they begin the bite at the heels of their larger competitors, their use of cloud computing could let them run a bit faster than traditional companies ever could.

Technology can be a game-changer -- just ask the companies that didn't jump on the Web back in the 1990s. Oh, wait -- you can't ask them. Because they are out of business.

This article, "The cloud is just starting to impact small business," originally appeared at Read more of David Linthicum's Cloud Computing blog and follow the latest developments in cloud computing at

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