ICAEW.com works better with JavaScript enabled.

Cloud computing: Weighing up the pros and cons

With the current hype surrounding cloud computing you don't need to be particularly tech-savvy to have heard of this latest technology trend. The term is being applied to a huge range of IT products and services, but what exactly is cloud computing and is it right for your business?

In simple terms cloud computing, often referred to as 'the cloud', means storing data and running applications over the internet rather than on your computer's hard drive or a local server. Although cloud computing might be a current buzzword, many people already use cloud services without realising it. Web-based email services like Gmail and Hotmail have seen users accessing their email in the cloud for some time. The Google Docs suite and social media sites such as Facebook and Twitter are other examples of popular cloud-based applications.

Cloud services for businesses have ballooned in recent years. A huge range of business applications are now available in the cloud in what is known as Software-as-a-Service (SaaS). The approach was first pioneered by customer relationship management (CRM) systems provider Salesforce.com, but now includes many other applications such as accounting and payroll software and enterprise resource planning. 

Businesses using Infrastructure-as-a-Service (IaaS) rent hardware and networking from cloud providers such as Amazon, Microsoft and Google, for their own use.

Platform-as-Service (PaaS) also enables companies to develop and host their own web applications in the cloud. Such services are based on a pool of computing resources shared with other users. Unlike traditional outsourcing or managed hosting, they are provided on a pay-per-use basis and so allow for the rapid expansion or contraction of business.

Many businesses are now considering moving substantial parts of their IT operation to the cloud, but what are the benefits? These will vary across different organisations, but may include:

  • cost savings as only the resources required at any given time are paid for;
  • ability to expand without significant IT capital expenditure;
  • access to applications that may be prohibitively expensive for some companies to buy outright;
  • less time spent by your own IT staff in managing and upgrading equipment or software as this is performed by cloud providers behind the scenes;
  • increased collaboration as information can easily be shared with people from outside the organisation;
  • increased flexibility because staff can easily work from home or on the road;
  • environmental credentials – the cloud is potentially greener as less IT equipment is required by companies.

Although the cloud can provide significant benefits, there are also potential drawbacks to consider including:

  • data security and compliance issues, particularly when storing sensitive data;
  • the need for a reliable Internet connection with suitable bandwidth;
  • business disruption due to cloud service outages which can occur even with the larger providers;
  • limited customisation, making it less suitable for organisations with very specific requirements;
  • potential for vendor lock-in.

It is security concerns in particular that deter many businesses from taking anything other than small steps with cloud computing. Recent research by the FSB found that two fifths of small firms questioned remain sceptical about the benefits of the technology in the face of perceived risks. However, careful assessment and evaluation of potential cloud providers can help to guard against security threats. For some companies the cloud may actually prove better managed and more secure than an office network.

Stay informed

To find out more about the benefits of cloud computing and managing the risks, see the ICAEW Library and Information Service's collection of online resources on cloud computing.