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Top 3 Reasons to Run Your Business in the Cloud

by Michael O'Connor Clarke  |  May 19/2010  |  , ,

One of the worst things that can happen to any freelancer or small business is a computer crash.  Losing critical client info, your writing, your designs, or your bookkeeping files can have a seismic impact on your ability to run your business.

Just imagine you dropped your beloved Powerbook right now, completely frying the hard drive – how much of the essential stuff you rely on every day would you lose?

Buying a great big backup drive might seem the best kind of insurance against this, but I’ve learned from hard experience there is a better way: trust in the cloud.

Head in the Clouds by Flickr user jpeepz

Head in the Clouds by Flickr user jpeepz

OK, sounds a bit like an obvious pitch setup. Let’s step back a bit; then I’ll explain.

For freelancers and small business owners, the traditional way to set things up when you’re first going it alone follows a predictable pattern. You get your computer, a printer, and perhaps a smartphone. Then you start loading up with all the software you think you’ll need to run things.

You’ll probably install the usual office apps (word processing, spreadsheet, etc.), something to run your email and calendar, and maybe an accounting package to keep your books in order.

The weeks and months go by and your business is growing. You’ve been churning out stuff like crazy  – proposals, estimates, bills, project plans, document drafts and designs spread across your hard drive. As your contact list, your pipeline, and the volume of work all grow, all those bits and bytes on your computer become a significant asset. They’re the heart of your business now; the work product upon which you’re building your reputation.

Stop and think: if all of that essential data was to suddenly disappear, how would you keep things going?

Even if you’re just using a big ol’ spreadsheet to track who you’ve billed and for what – not having access to that basic information can mean the difference between getting paid and going broke.

Computers fail. Hard drives die, power supplies crap out. Even if you think you’re backing things up properly, just imagine your dog’s tail swats the bigass external drive off the desk while you’re running a huge backup, wiping out thousands of digital photos, hundreds of thousands of written words.

In case you’re wondering: this specific example happened to me. Except I can’t even blame an eager, tail-wagging puppy – I tripped my own dumb arse over the power cord of the 500 Gig drive while it was running. I lost everything. I can’t begin to tell you how miserable this was. We lost thousands of photos from the early years of our three kids, not to mention over a decade of collected writing and presentations.

And this is just one episode. Maybe I just have really bad hardware karma, but over the years, I’ve fragged more hard drives than I care to recall.  Each time, it’s been a nightmare to try to piece things back together again.  I’ve even had a situation where I’d been diligently backing up onto an external drive every night and archiving that onto CDs too, only to find that the backups were somehow corrupted and all my archive data was pretty much useless.  Gah!

And then… I discovered the cloud.

In the last few years, I’ve steadily moved almost everything off my laptop and into the trusted hands of online providers.  Starting with my email and digital photos, then documents, presentations, my music, financial records – it all lives, or is backed up, in the cloud.  In fact, I now feel like Victor Kiam in the old Remington ads: I liked the cloud so much, I joined the company (FreshBooks’ entire service is 100% cloud-based).

I get kind of excited about this stuff and have converted my 73-year-old Dad, among others, to the cloud. But when I first talk to people about relying on the cloud, there’s a common set of objections that seem to come up.  Security is the big thing, then the feeling that because all your stuff is “out there” rather than “right here” you somehow have less access. Other people raise the question of cost.

Here’s the thing: I think these three objections are actually the top three reasons you should go with the cloud. For everything.

Here’s why:

1. Security

If you have any concerns about data security, I’d argue that your data is, in fact, MORE secure in the cloud than stored on your own computer.

Think about it: the people who build big cloud-based apps and storage systems have to make huge investments in security, backups and data protection.

I now run entrust all my valuable data on three machines at home to an automatic cloud-based backup service called Mozy. It’s saved my bacon more than once already, and I love their “set it and forget it” way of working. I’m confident that whatever giant server farms they have, they’re a lot more powerful, more secure and better backed up than any external drive I could buy.

When I started working at FreshBooks, I learned that our customer’s data is always backed up in real time to three sources in two different locations, and backed-up to tape at an off-site location nightly. That’s way more protection than the average small business can afford to implement for themselves.

Plus, for the majority of cloud-based apps, the connection between the servers and your computer is encoded using 256-bit SSL encryption. If you’re smart and use a complex password, your important data is arguably less likely to be compromised if it’s stored online, compared to the risk that someone could steal your laptop at the coffee shop.

It might be just me, but I’m inclined to think there are a lot more petty villains lifting shiny laptops at *bux than there are sophisticated hackers trying to figure out the password for my PayPal account.

When you think about how fragile, how crash- and theft-prone your computer is, why wouldn’t you want the cloud looking after things for you? When was the last time you heard about Flickr crashing and losing thousands of photos?

2. Mobility

This seems obvious to me – if all your important stuff is online, you can access it anywhere you can find an Internet connection. Why wouldn’t you want that?

I know packrats and the paranoid feel the need to carry ever document they’ve ever written on their laptop at all times – trust me, I’ve been there too.  But once you discover the cloud, you’ll be stunned how liberating it is.

With a service like Google Docs, I never have to worry about what’s on my hard drive, and it’s so much easier to share and collaborate with other team members. Sharing content is way easier when I can just send someone a link, instead of what happens when I attach a document.

Think about how stupidly inefficient attachments are: I’ve got a document on my machine, attach it to an email message, which creates a copy in my email Sent Items, plus a copy in your Inbox and then, probably, another copy on your desktop. Links don’t work in every situation, but they’re so much more elegant.

Plus, being cloud-based means I can access the same content from any of the computers at home, my main work laptop, my Blackberry or even my iPod Touch. The more stuff I put in the cloud, the more access I have.

3. Costs

Cloud-based systems typically work on a kind of rental model. The usual label is “Software As A Service”, but I like to think of it as Software At Your Service.  It’s there when you want it, always up-to-date, and not consuming a ton of local system resources.

When you’re looking at the cost of running things locally compared to the cloud, you’ve got to think in terms of full-life costs.

Start with the price you’d pay for all the hardware and software you need right now – comparing the off-the-shelf products with the cost of cloud-based apps.

Then think about how your disk space needs will grow over time as you store more and more stuff. Add in the cost for a big backup drive, probably at least twice as big as all the hard drives in the computers you’re using. Then think about the cost of replacing that backup drive when it fills up or fails.

Oh, and then add in the cost to buy software upgrades as your applications get updated every year or so.

And don’t forget to look at the prices a lot of software vendors charge for online or phone support – you’re going to need some help one day, best to count that into your budgeting now. Many vendors offer prepaid annual support packages, or you can go with the pay-per-use support lines that charge $30 or more per call – either way, these costs start to add up pretty quickly.

Now run the same quick cost analysis for the cloud-based approach.

I won’t get into all the details here, but let’s work a couple of real quick examples – backup and office apps.

Backup: you can pick up a 1TB external backup drive for about $100 right now. There are some pretty sweet deals out there at places like TigerDirect. A whole freakin’ terabyte for less than a hundred bucks!  If you want the ease, speed and convenience of having all your data backed up to something you can just plug into the back of your laptop, I say: do it.

But going back to everything I was saying above about the failure risk with local backup systems, I think you should look at the cloud too. My Mozy backup account, just as one example, costs me $52/year for unlimited storage space.  I’ll say that again: fifty two bucks a year for as much storage as I can ever use. And I never have to remember to backup –it all happens automatically.

Office Apps: I know a few people who’ve made the switch to Google Apps for their home-based business and I’m sure this is the tip of a much bigger iceberg.

This is kind of a no-brainer: the Google Apps Premier Edition package includes Gmail for business, Google Docs, Google Calendar, Google Sites, and a bunch more for $50 per user per year, with a 99.9% uptime guarantee.

Compare that to the cost of even a basic package of equivalent desktop apps – typically $150 to $400 per user.

And we haven’t even touched on the cost of software upgrades and maintenance over the full life of your system. Like most cloud-based providers, the Google guys roll out code updates, bug fixes and upgrades on the fly, ensuring everyone’s always using the best and most up-to-date version of the code.   In 2009 alone, they launched more than 100 improvements to their Apps suite, and most of their customers probably didn’t even know stuff was getting fixed and upgraded in background – it’s just seamless.

I could go on and on about this stuff. Yeah, OK – so I guess I already did.  I’ll shut up for now and let one of our customers have the final word. Check out this testimonial to cloud-based computing from a FreshBooks and Google Apps customer on the Official Google Enterprise Blog.  Pretty compelling stuff, this cloud business.


  • http://www.thejargroup.com A.J. Lawrence

    Starting with Freshbooks almost three plus years ago, we’ve been moving our entire infrastructure into the cloud even to the point that we’re dropping quickbooks and moving to Xero based upon their integration with you guys.

    You guys do a great job thanks for the service and the tasty bacon down in SXSW!

    A very happy client! A.J. Lawrence of the JAR Group

  • Scott

    All good points. And I’ve moved several of my apps and their data to the cloud. But you overlooked a big negative. What happens when the company you’ve entrusted your data to disappears one day with no warning?

    We all know that companies go out of business or change their focus. Your data can be gone in an instant. Remember the dot com bust…

  • http://www.freshbooks.com/our-team.php#mocc Michael O'Connor Clarke

    Many, many thanks A.J. – great to hear that the growing ecosystem of integrated cloud-based apps is working well for you.

    Scott – you raise a really important point, thank you. The risk that a cloud-based vendor you’ve placed your trust in could evaporate (pardon the pun) is a valid concern. I think this is why it’s absolutely essential to do your due diligence and ask the tough questions before you get into bed with any vendor.

    The key question, for me, is “what’s my exit path?” If a cloud-based provider has their act together, they’ll have already thought this through, and they’ll recognise that vendor-client relationships don’t necessarily last forever.

    One of the things we’ve tried to do in building FreshBooks is ensure that it’s as smooth and easy to get your data out (for backups or transitions) as it is to get started with the app. If you’ve poked around in the Reports in your FreshBooks account, you’ve probably noticed that all of them can be exported as Excel or CSV-formatted files, plus you can export your entire client list, staff, invoices, timesheets and other stuff.

    We believe we’re going to be around for a long, long time – “built to last” is central to our philosophy. But if some cybergeddon knocks the cloud offline, it’s nice to know you can keep another copy of all your data, so you could still collect payments even in a post-apocalypse world :D

  • http://blog.jdlh.com Jim DeLaHunt

    Funny you should bring this up; I’ve been thinking a lot about preserving one’s digital life over decades, and the merits of using the cloud vs local disks for the purpose.

    The cloud has a lot of strengths, which you point out. For backup of the core, most essential data — making sure it’s available tomorrow if your local computer dies — the cloud is a good way to go.

    But the cloud has drawbacks.

    1. As Scott points out, the cloud vendor may fail. Maybe you get enough warning to activate an exit strategy. Maybe the exit strategy works flawlessly. But, maybe not.

    2. My impression from reading the literature is that the biggest threat to your data is not a local hard disk crash, it’s not bothering to move the data from an old home to a new home — from the old laptop to the new laptop, from the old cloud account to the new cloud account. The data gets lost when the old account closes, or the old laptop gets sold. The more of your data you trust to the cloud, and the more different cloud places you put it, the more at risk you are that you won’t move your data forward.

    3. You left out a security risk of the cloud: that the cloud vendor will look at your data, or let someone else look at your data. There are rogue employees. There are also police investigators with search warrants, and I’ll bet it’s a rare cloud host who will fight a search warrant on your behalf.

    4. The cloud is more expensive. Gigabyte-year for gigabyte-year, even the most economical cloud storage providers cost about 10 times as much as a household file server with high-quality disks. I pay US$0.15/GB/month to my cloud backup provider, but only US$0.01/GB/month (over a five-year lifetime) for my household file server.

  • http://www.freshbooks.com/our-team.php#mocc Michael O'Connor Clarke

    Excellent stuff, Jim, thank you. A few additional thoughts, in response to your four points:

    1. True. When it comes to protecting valuable personal or business data it’s ALWAYS smart to have a “belt & braces” approach. I’ve learned that the hard way. In addition to my Mozy account, I still have a big ol’ external hard drive too. I’m a born optimist in most things, a pessimist when it comes to data protection.

    2. You’re right. This stuff is complicated. I’ve been fascinated by “lifestreaming” projects such as Gordon Bell’s MyLifeBits and the thinking people like David Gelernter have invested in this problem domain. I don’t have any easy answers yet, but it’s something I continue to worry about, especially as my kids grow and extend their digital footprints with every passing year. My friend Adele McAlear gave a talk (which I missed, alas) at the mesh conference here in Toronto this week about “Death & Digital Legacy” – she keeps a site dedicated to exploring these issues.

    3. Indeed. Again, it’s incredibly important to do your research in this space. If your cloud vendor is storing your data with a host provider that is SAS 70 compliant, that should give people some reassurance here, but it’s also critically important to review the privacy policies, terms of service and other public statements of your cloud vendor. In short, you’ve got to get happy with this one question: do you trust them.

    4. Depends who you go with, I guess. I still think my $52/year for unlimited storage space is a pretty darn fine deal. I’ve no affiliation or official connection to Mozy, btw – but they’ve saved my bacon more than once and I do love them. It’s hard to compete with “unlimited” :D At the same time, hard drives are so ridiculously cheap these days, it’s daft to not include a couple of big external drives in your personal/business storage scheme – to be sure, to be sure (as we say back home).

  • http://edocumentsciences.com Ron Arden

    Michael,

    Great post and I couldn’t agree more. There are always risks with your data, but I trust the experts a lot more than I trust me. I think the total cost is a lot less than people state, because you don’t have to worry about all the time you spend configuring and managing your own systems. People usually only look at the cost of the hardware and software, but the cost of people is the largest issue.

    With SaaS I can act like a big business, even though I’m a small business. This wasn’t possible 10 years ago. Just like I wouldn’t consider generating my own electricity, I would rather pay someone else to manage my compute resources.

    Thanks for commenting on my post at http://edocumentsciences.com/no-power-no-problem-in-the-cloud/


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