Cloud computing is the big thing at the moment. Easy to use and simple to pay for, the biggest advantage of hosted business services is that they are available anytime and from anywhere. Moreover, they eliminate unnecessary investment and reinvestment in hardware, software and ongoing maintenance.

IT support consultants talk all the time about the benefits of cloud computing and businesses are using Salesforce for CRM; Zoho, Microsoft Office Live, and Google Apps for office productivity; Intuit QuickBase or a hosted Microsoft SQL Server for databases—and the list goes on.

However, they rarely outline the drawbacks. Small businesses and SMEs need to think long and hard about the value they will get from having their information infrastructure, software and services hosted on the Internet, rather than on their personal computers or network.

“Business owners should ensure that they have the right IT infrastructure and broadband services in place to meet their information demands,” said Dominic Jones, Managing director, Barton Technology.

“Cost is clearly an issue, as is security. But the biggest problem is Internet access. If you don’t have sufficiently robust broadband, equipped with adequate bandwidth, it can limit your flexibility and even your creativity. Cloud computing can also restrict the software you can use on individual machines—and we can all agree that lack of flexibility is not an option for small businesses and SMEs for whom agility is often the key selling point.”

Other considerations are the additional cost of data transfer fees, along with the fact that you do not have control over the remote servers, their software, or their security—your data is at the mercy of a third-party company (you better make sure you trust them). It may also be difficult (or even impossible) to migrate massive amounts of data from the provider.

Cloud computing can be revelatory for the right business—especially if you only want a few applications like webmail, CRM and document collaboration—but failure to plan might make it difficult to improve your service levels, increase your business agility, increase your financial predictability, or even reduce your costs.