There’s a fair weight on the shoulders of the UK’s small and medium-sized enterprise community: regularly described as the ‘backbone’ of the economy, they now have the added onus of dragging it out of recession.

But if there’s a silver lining, it may come in the form of cloud computing, which has been heralded as a true opportunity for smaller organisations to bounce back from recession.

In a report from last year, K2 advisory predicted cloud computing would even give small companies an advantage over [larger] enterprises.

Behind the hype

This year’s Microsoft SMB Cloud Adoption Study goes further, outlining a far more transformational future for cloud users. “I believe there is huge potential for cloud technology to accelerate both the business opportunities for the ICT industry as well as for SMEs in Europe,” says Klaus Holse Andersen, area vice-president of Microsoft Western Europe.

But there’s still a fair bit of hype around the cloud that can make it seem more daunting than necessary for small business bosses. Reduced to its most simple form, it’s just the way companies buy IT — virtualisation is really the only ‘techie’ part.

It offers the ultimate answer to IT on demand, offering a pay-as-you-consume solution to businesses (and individuals) that promises to have a profound impact on work culture, not to mention small business growth. For entrepreneurs, barriers to entry have genuinely been lowered – little wonder it’s being heralded as the engine that will drive the recovery.

It’s the advantages of being to keep software up-to-date and to access it anywhere that are driving uptake, says Microsoft’s research.

“One of the wonders of cloud computing is that, unusually, small businesses are among its early adopters,” says Andy Burton, the chairman of the Cloud Industry Forum, an industry body promoting best practice.

So far, back-up, storage and back-office functions are typical non-core activities companies are pushing into the cloud. (This has had the unexpected bonus of improving upon somewhat haphazard disaster recovery plans too common among SMEs.)

But it’s also proven popular for email, especially if the company’s got a highly mobile workforce. This, along with cloud-based video-conferencing and VOIP, gives small workforces access to previously prohibitively expensive, integrated communications.

Cloud opportunities

And it’s the opportunities for collaboration that Burton believes hold the greatest value for small firms, lending them agility, scalability and flexibility to create and adapt their business model to meet customer needs. While the cost benefits are important – Microsoft’s research cites BizSpark participants who’ve cut costs by 20 or have been able to start businesses on a shoestring – an upcoming CIF survey found savings of secondary value to collaboration among early adopters. (Imagine how much slower response times might’ve been after the recent Japanese earthquake had there been no cloud services.)

Small business interest is likely to be the tipping point for mass-market adoption, too. According to the Microsoft report, 39 percent of over 3,200 small businesses surveyed expect to pay for one or more cloud service this year, up from 29 percent in the previous year. The number of services small companies pay for will nearly double, with uptake accelerating as owner-managers look to upgrade their existing technology infrastructure.

Barriers to cloud computing

And what about pitfalls? The ‘click-through culture’ and low cost of cloud computing can make users lazy about reading contracts, and Burton urges buyers to do the usual needs assessment before buying services. Consider what you want to keep on premises and what can go into the cloud.

There are also cultural and perceptual changes to overcome – with the vast majority of users more comfortable with cloud provision that is ‘local’, according to Microsoft’s research. “People are concerned particularly about where data resides. So it’s important to understand your supplier’s approach to data storage,” says Burton.

Another inhibitor can be connectivity – speed as well as down time. The cloud is generically better, says Burton, but it’s nevertheless important to carry out a risk assessment – what do you want from a service-level agreement, can the cloud provider deliver on its promises, how will it behave regarding data transfer and security if you want to switch vendors? The CIF has codes of practice for providers, while cloud computing has now even attracted the beady eye of the EU commissioner Neelie Kroes – a sure endorsement that it has ‘arrived’.

Future gazing, cloud uptake is only likely to grow, spurred on by mobile technology and 4G. Burton even sees a time when the workplace as a single entity dissolves. “The components are all there for something ‘transformational’, now it just has to come together.”