Cloud Computing – A Silver Lining for SMEs?

While cloud computing has been around for some time, with the rapid improvements in its technological capabilities, it is gradually replacing rigid software with an all-inclusive low cost computing solution.

However, implementation of the cloud technology challenges business owners to re-look and re-strategise their business processes. Today, cloud computing has all the markings of a disruptive innovation.

Why is the cloud beneficial?

A survey released by the Asia Cloud Computing Association (ACCA) estimates that SMEs in developed and emerging Asia Pacific will spend about $2 billion on cloud services, with a market growth rate of about 42%. Cloud computing is fast becoming a game changer especially for Small-Medium Enterprises (SMEs) with its scalability, flexibility and economies of scale.

One critical advantage that cloud computing offers to SMEs is its economies of scales. Cloud computing provides SMEs access to sophisticated technologies on a pay-per-use basis that used to be exclusively available to larger organisations with deep pockets. Its elasticity of use makes it customisable to each individual business needs without the hefty price tag. Furthermore, SMEs are relieved of the burden of software maintenance or upgrades as they are typically handled by the cloud service vendor.

Another predominant advantage is the easy accessibility of cloud services. The cloud is platform-independent and can be accessed on the go via any device capable of Internet connection. From an SME perspective – that is focused on revenue margins and achieving growth – cloud technology has the potential to be a great equalizer.

How does the cloud help businesses?

With cloud technology, SMEs can now streamline their core business processes and shift their focus towards business growth. Based on a cloud computing survey released by KPMG, 49% of the huge enterprises surveyed indicated that they use cloud technology to drive cost efficiencies. Additionally,70% citied reducing costs as one of the three most successful areas of enterprise cloud implementation.

A critical pitfall that SMEs typically face is human capital management. For instance, payroll and taxes might still be manually calculated via excel spreadsheets or employees’ attendance are being tracked via punchcards. With changes in government legislations such as the recent announcement by Singapore Ministry of Manpower (MOM) on itemised payslips with key employment terms to their employees, SMEs may struggle to adjust their HR operations to be in-line with the ever-changing legislations. By leveraging on cloud technology, administrative payroll operations, such as statutory tax filings and salary disbursement, are now being automated. Given the multi-functional field of human resources, putting the HR department “on the cloud” would greatly reduce the administrative work that comes synonymously with HR.

Government bodies are quickly recognising the manifold benefits of cloud technology and are strongly encouraging businesses to leverage on its potential. For instance, the Singapore Government introduced the Productivity Solutions Grant (PSG) Scheme that allows SMEs to enjoy funding support for investment in productivity and innovation improvements.

Cloud technology has brought about numerous and exceptional benefits to SMEs and giant corporations today. However, are we too quick to conclude that cloud technology is bad given the negativity associated with “disruptive”? Perhaps, SMEs should start embracing the fact that every “cloud” has a silver lining.