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What Type of Cloud is Right for your Small Company?

August 3, 2011 - 0 Comments

Understanding the differences between public, private, and hybrid clouds is critical to choosing the right one for your business

Several vendors and research firms have conducted surveys in the last year to find out if smaller companies intend to purchase computing services through the cloud. The answer has been an overwhelming “yes”—with a few caveats. In Cisco’s SMB Cloud Watch survey, 75 percent of small companies reported using a hosted service, but only 20 percent of respondents understood that this constituted cloud computing technology. Microsoft found in its 2011 SMB Cloud Adoption Survey that 74 percent of small companies plan to use at least one cloud service in the next three years, but only 39 percent expect to pay for those services.

What do these surveys tell us? Some smaller companies aren’t sure what cloud computing is or how it might benefit their companies. Others haven’t decided which cloud-based services will best support their business operations or if they’re worth paying for. Before you can decide if cloud computing is right for your small company, you need to understand the three different types of clouds and how they might impact your current IT operations.

There are three types of cloud deployments: the public cloud, the private cloud, and the hybrid cloud. The type of cloud deployment model you chose depends on the level of security your company requires, the kinds of applications you want to access in the cloud, and your organization’s in-house expertise.

In general, the public cloud is often what people think of when considering cloud computing. Public clouds are owned and operated by a cloud service provider, and they’re open to any company that wants to subscribe to the cloud-based service. Some of the most popular public cloud services include Cisco WebEx conferencing service,’s CRM service, and Amazon’s Elastic Compute Cloud (EC2). Public clouds are particularly well-suited to small companies that have limited IT expertise in-house and small IT budgets but want to be able to respond to changes in the market with greater agility.

In a public cloud, the cloud-based service is hosted, managed, and maintained on the cloud provider’s network. Each company that purchases the service gets its own, contained instance of that service. The public cloud is considered multi-tenant, because more than one company can access it. Because it is multi-tenant, some companies have concerns about security and privacy; for instance, a healthcare organization that must adhere to HIPAA (the Health Insurance Portability and Accountability Act) regulations may be uncomfortable with a public cloud due to worries about patient data leaks. At the same time, public cloud-based services are flexible, cost-effective, and convenient for many small companies. Public clouds can often offer greater availability and access to newer technologies than small companies can afford on their own networks.

The Private Cloud

The private cloud is exactly like it sounds: privately built and operated for just one company. Private clouds are more likely to be deployed by large enterprises than small companies; pure private clouds are built and managed on the company’s network by their internal IT staff, so they require a high degree of expertise in technologies such as virtualization. Private clouds are far more expensive than public clouds and take longer to get up and running, but they do offer more privacy, greater control over data, and tighter security. The services that a company can offer employees through a private cloud are generally limited to whatever their IT staff can develop or deploy.

The Hybrid Cloud

A hybrid cloud combines aspects of public and private clouds with different deployment models. For large companies, a hybrid cloud might include a private cloud that interoperates with a public cloud. For small companies, a hybrid cloud deployment is more likely to be a virtual or hosted private cloud, which gives you access to dedicated resources hosted by a service provider in a public cloud. This hybrid cloud model gives small companies tighter security than a public cloud, but it also offers more flexibility at lower costs than a pure private cloud.

Small companies might also choose a hybrid cloud approach for certain types of cloud-based applications; for instance, you might use a cloud-based CRM service but keep related business applications, such as accounting, on your own network. A hybrid cloud model can be a safe and reassuring way for small companies to ease into cloud computing because you can choose which applications and data are accessible via the cloud.

Which Is Right for You?

Hybrid and public clouds are better suited to the needs—not to mention budgets—of small companies. In fact, researchers expect small companies to ramp up their adoption of services in the public cloud in the next few years. AMI Partners’ World Wide Cloud Services Study shows that SMB spending on cloud computing will exceed $95 billion by 2014; the vast majority of those cloud services will be based in a public cloud. According to IDC, public cloud services will account for 46 percent of net new growth in IT spending by 2015. Even more telling, though, is IDC’s assertion that “cloud services are a critical component in a much larger transformation that will drive IT industry growth for the next 25 years.”

Has your company starting using applications or computing resources in a public or hybrid cloud? If so, which model have you found success with?

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