I came across a news item reporting a recent survey of SMBs (1-99 employees) from the US, UK, Germany, Italy and Brazil. The survey by Techaisle found that only 37% of Small Businesses had heard of Cloud Computing. Of those that had heard of Cloud Computing, 13% did not understand what it meant.

Over in technology vendor land there is a frantic buzz around Cloud Computing. The leading vendors trip over themselves in an effort to tout their Cloud credentials. New Cloud Heavyweights such as Google and Salesforce are reporting massive revenues but barely existed 10 years ago. Venture Capital funding is pouring into Cloud based companies. There is a massive amount of hype within the technology industry, and you can quantify the interest by typing “Cloud Computing” into Google Trends.

But back in the real world of real businesses, of accountants practices, of small hotel chains, of construction companies the term Cloud Computing has no resonance with the majority of people.

I’ve been intrigued as I go through the start-up phase for Keboko and I’ve been speaking with friends and acquaintances across a diverse range of industries. The reaction to my statement that Keboko is “a Cloud Service Provider, helping small and medium sized companies focus on their core business by migrating their applications into the Cloud.” has been an eye opener.

Blank stares all round. Usually followed by “that sounds very complicated!”

It’s important for me to understand that Cloud Computing is a different language to most businesses and that for it to really succeed companies like ours, and the leading vendors themselves like Google and Salesforce and Xero will have to leave the technology behind, and focus on what they will actually “do” for a business and it’s bottom line.

If you are one of the 63% that have not heard of Cloud Computing, then the best analogy I can give you is Electricity. In the early days of Electrical Power businesses would purchase, install, maintain and run their own power generation systems. Usually a steam generator, or perhaps some kind of water wheel.

This was mainly due to necessity, in that electricity could not be transmitted over long distances. But in time, the transfer to Alternating Current saw the rise of the Utility Company, a business that generated Electricity on a much larger scale and with a much higher level of service. Because they could scale to hundreds, and then thousands of clients they experienced much lower costs per unit, and passed these cost reductions on to their clients.

Of course there were some larger companies who held out – “Electricity is too important to leave to someone else” but they too reached the point where the cost of running their own power station was too high, and they could never reach the service levels of the Utility Companies. Today as you run your business you take it for granted that you use an electricity company instead of generating power yourself.

Now, if we look at how businesses have adopted technology. When you launched you probably just needed a laptop or PC. Then you recruited a few more people and needed an email server, and maybe a file server to store shared documents. This was a bit beyond your own team so you brought in an external consultant (or maybe recruited someone).

He said you needed a firewall to protect yourself and an Anti-Virus/Anti-Spam appliance. He suggested you get a back-up server and you take tapes off site each night (or each week if you are busy). You then needed an accounts package, and so that sits on another server. Oh and there is a database of customers that you use.

All of this is on your network (or maybe hosted by your IT consultant), it is your kit, you paid for it, and it is depreciating on your P&L. It is probably not the current version (Exchange 2003, or an old version of Sage) and you probably couldn’t say which box is adding the most value to your business.

Now to understand the benefit of Cloud Computing just overlay the Electricity Analogy on your IT systems. Stop “generating IT” yourselves, start using a “utility IT provider”, always be on the most current version, own no depreciating assets, redirect your IT employees to business growth strategies and ultimately stop running a mini-datacentre and focus on your core business – accounting, retail, manufacturing….

There will always be some people who say “IT is too important to leave to someone else,” but as with water, electricity, gas and even banking, some of the core struts to our existence are better delivered as a service than by trying to do it ourselves.

If this idea has piqued your interest, then your first stop will be to have a chat with your internal IT team, or your external IT Consultant – “I’ve heard about Cloud Computing – what do you think?”

Now I don’t know your IT guy, but he might feel that Cloud Computing threatens his existence (who needs a turbine maintenance team when you are plugging in…) so I would urge to you reframe the question, “If we moved some of our applications to the Cloud and freed up 40% of your time and budget, how do you think you could help us better with our core business strategy of …. more new customers, more products per customer, lower debtor days?” (amend as applicable)

Immediately you have turned this into a positive change for him (and you) and you have an employee or consultant who was a cost to the business, focusing on business growth. That really is the heart of Cloud Computing. Not the technology. I hope this has been a helpful introduction to Cloud Computing.