There is still some confusion in the market today about what defines a cloud-based solution. Some people will say that any business software accessed by users via the Internet is a cloud solution – but I don’t agree. Here’s the difference: A hosted solution is one in which you buy or lease software, and pay a company to host it on a server so that users can log in to it via the web. In this model, a company must purchase or lease the software, pay for maintenance and support, pay for hosting, pay for services or implementation etc. Another difference is that the software is not “open to the public” for use. You can’t have multiple companies or instances firing at the same time. Usage is an agreed upon arrangement between the software purchaser and the agreed upon users.
Cloud-based solutions are software solutions in which any number of users or companies can “subscribe” and create their own instance of the solution specifically for their users. Salesforce.com is a great example of a cloud-based solution. Cloud-based solutions offer several benefits for small to mid-sized companies. If you’re trying to decide between traditional software, hosted software or cloud-based software, here’s a few benefits cloud-based solutions can offer:
Spend a little vs. A lot at once
Most cloud-based solutions are sold via subscription, which means you won’t need to pay for the total cost of the solution out of your pocket all at once, like you would with a traditional software installation – you’ll pay a little over a long period of time – or indefinitely. Some cloud-based solutions make you sign a contract that holds you to the subscription for a period of time, while others offer a simple month-to-month agreement. If you hate it after a month, you simply cancel. Normally you’ll pay per user too. Typically longer sales contracts will result in lower subscription fees, however beware that many cloud-based solutions will make you pay for your subscription in two payments or annually. Still, this model allows you to control your cash flow and not have to come with a large investment to purchase and install software.
Avoid Maintenance/Support/Hardware Fees
Maintenance is usually covered in the subscription fee for using a cloud-based solution. When you purchase traditional software, you’ll pay on average 21% of the total purchase cost for maintenance and support in an annual maintenance fee. I’ve seen it as high as 28% and as low as 14%. Using cloud-based solutions you don’t have this annual fee – again, you’re spreading your payments out over a long period of time. Most cloud-based solutions require a computer and an Internet connection – usually no additional expense for servers are needed to provide access for multiple users or users at multiple locations.
Avoid Enhancement Dilemmas
Many companies don’t keep up with their annual maintenance fees because it’s expensive. Often you’ll see established software companies, like Microsoft, sunset version releases of software because it’s too expensive to support 11 versions of the same software product. If you’ve done any customizations to the software or are behind, upgrading the software, it can be painful, long, and expensive. Cloud-based solutions are automatically updated when a new version is released, the next time you log in to your solution, the new stuff will be there – no mess, no fuss.
Built for Ease of Use and Configuration
Cloud-based solutions that have staying power will be intuitive to use. When you create solutions that can be implemented with a click of a button, you have to be sure users can easily navigate and use the product without having to attend extensive training. If it’s too difficult to use, cloud-based providers will know you’ll cancel right away, so it’s in their best interest to not only make it simple and intuitive – but to make the solution configurable so it fits your unique business. Salesforce.com is a great example because a user with very little technical expertise can easily customize the system without requiring technical resources. Providers know that if it’s too “cookie-cutter” and not customizable, subscribers will leave and jump to another solution that allows them to run their business the way they want to.
Availability of Add Ons – Easy – Simple
This is one of the greatest benefits for companies. Cloud-based solutions with staying power generally have a constellation of add-ons available that you can easily install yourself – and uninstall yourself – to provide functionality that you may require. An add-on might be a solution that adds calendaring features, or is specific to your industry. Providers want to build these add-on communities because they need to address the needs of the masses. If you do need customization or want to bolt integrate other applications you’re using, you’ll find that generally, cloud-based solutions are built with the latest tools and protocols that make it a bit easier and cheaper to integrate should you need to resources to do it for you.
Scalable and Flexible
Maybe your business is just getting underway – if so, cloud-based solutions provide a great way to try before you buy to make sure it’s a good fit. If you hate it, you cancel – easy! You may start out with 1-2 users at first, and as your business grows, you’ll be able to take on the expense of adding additional users. While your subscription will increase as you add users, you usually get a discounted fee for users. Cloud-based solutions also offer the flexibility to downsize and cut costs quickly during lean times.
If you’re looking to conserve cash, cloud-based solutions can go a long way to helping you get the solution you need to run your business at a price point you can afford. They give small companies the flexibility they need to grow (or shrink) and are a good fit for companies that don’t have technical resources, or want to be able to manage their systems on their own.
About the Author: Lisa Steinhart is the Marketing Director at nChannel. nChannel’s cloud-based management portal enables distributors and retailers to easily and cost effectively manage multi-channel sales and supply chain processes. By connecting the existing ERP, POS, and Web Store systems to nChannel, subscribers can easily syndicate item data, deploy drop ship programs, track and manage inventory, and view customer activity across all channels, from any web browser.
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