Small Business Analytics on the Cloud: Is There Real Value?
The cloud computing hype rolls on despite some contrary statistics from recent surveys. According to one conducted by the research firm TNS covering 3600 IT professionals, 45% of small and medium businesses recorded no measurable savings from moving to the cloud. However, the issue may not be so much in the cloud as to the applications which run in the cloud. Unfortunately there is not much information to clarify if this was the case.
Let us take a simple example: if an SMB was planning to switch to using basic productivity software such as word processing, spreadsheets, emails etc on the cloud, the cost of buying a shrink wrapped box to serve, say 3 employees would probably run less than $600 and most likely will be good for at least 3 years, in which case the cost of ownership is roughly $70 per employee per year. Doing this on the cloud would probably cost the same! So if any of the SMBs were using cloud to get covered on basic productivity suites and expecting a big saving, they would naturally be disappointed. But this is not how one must look for benefits from cloud computing.
When we talk about cloud computing for say, analytics, two factors stand out as the real value adds. One is the ability to access tools and data from any location or device. The other factor from which SMBs can get significant benefit comes from multi-tenancy and "utility billing" aspects of cloud. An SMB does not need to purchase expensive licenses for specialized advanced analytics software, but could have access to models built using these platforms.
The value proposition of using analytics on the cloud comes therefore from these two areas:
1. Access to actionable information without device or location constraints.
2. Affordable access to expensive software due to sharing the license costs with other "tenants" and "pay-per-use" billing
Advanced analytics is not a commodity that can be shipped off in shrink wrapped boxes, but needs a combination of some expert help and good data management practices. Data is today cheaply available. Open source technology makes access to the tools fairly easy and also cheap. The missing element is expertise. However, for pre-packaged basic models, this is only needed one time. Thus the only investment of significance is the one-time expert support. After which the SMB has very minimal need of this resource.
Here is an example of a mid sized company using this process for cost modeling and forecasting.