Is Billing Aggregation the Nirvana in the Cloud?

If you want to buy Salesforce.com the most common way is to work out what you need in seats and the types of user, then work out the monthly total charge, multiply it by 12 to get the annual fee then add any project management work to go in and you have your first bill. Eh? You mean that despite the advertised monthly fee you actually pay annually up front?

Actually as a residue of the world of SaaS this is exactly how Salesforce.com operates. As did my company, PlaceWare. Even with a minuscule discount for cash offered, most companies paid the annual charge up front rather than pay monthly.

Here's the even dafter thing, companies buying the Salesforce.com actually accrued the charge monthly to the profit and loss account despite paying annually. Meanwhile, Salesforce.com themselves smoothed the revenue recognition equally over the 12 months for the seats while recognising any project management fee up front.

So why this difference in the cash and P&L? The old way of buying software was on the capital account - pay up front but depreciate the 'asset' over 36 months. Salesforce.com offered to not use the capital account but to pay for the software through overheads as a service while saving the cash account the extra two years. So to some extent, paying annually up front represented a positive on the cash-flow versus the old way. And it stuck.

Until now there hasn't been that many mainstream successful Cloud software offerings with the exception of Salesforce.com, and maybe NetSuite, Taleo, Workday and a few others. SaaS has kept its little notion of paying 12 months up front as a peculiar thing to software. You even get it to some extent in buying storage space as Dropbox, Box.net and others all advertise monthly costs but charge annually.

The next wave of the Cloud, where many more software packages will migrate to the Cloud, is reckoned to be offered a different way. Gone will be the days of up front annual charges but monthly invoices will be payable for all the software licences consumed by companies. Currently, firms average less then 2 or 3 Cloud based software services each in the US and that's considered relatively high adoption. Most SaaS is offered directly from the vendor and so there is no middle man reseller involved in the main. So it is easy to provision and charge in a certain way.

But the next wave could be very different. For one, it's likely to use channels to a much greater extent. Why? Because most of the new entrants into Cloud based software will be traditional software vendors migrating their offerings as a web alternative. They will most likely leverage the channels they already use to service customers and so resellers may be selling multiple SaaS offerings from varieties of vendors to lots of end users. Pretty soon, keeping track of all those licences in play will become a pretty intensive task.

But if the end users are only buying 2 or 3 SaaS offerings, why would they be worried by over complexity of bills? Might they still be happy to buy the service paying annually but smoothing the charge over the P&L monthly? In the case of larger companies that may be the case - they have deeper pockets and can negotiate harder. But SMEs will be different. For one, they are greater credit risk to resellers and vendors and secondly they have less inclination to pay up front for 12 months, is the theory. But secondly, one of the great advantages of the Cloud to SMEs is that they can smooth costs for IT as they scale rather than having pump, cash-intensive periods of investment - each incremental user is a simple additional monthly cost.

So the aggregation of bills on a consumptive basis is seen as the way forward. Companies offering billing platforms which will take all that sold licence information, storing the history and producing one monthly bill based on the amalgamation of all that information per end user is important.

Well, not actually as important as it will be for the resellers who will have to produce bills for all their customers. It's actually the layer in between which has the greater need. End users may be happy to consolidate bills as usual - after all they have multiple bills coming in from multiple suppliers already with enough staff in accounts to deal with it. SMEs may appreciate an amalgamation service but realistically isn't that what their credit cards are for?

If an SME buys its SaaS on a monthly credit card account, all the bills will be in one place with an average 30 days credit.

Resellers, meanwhile, will have tons of data to deal with and those distributors who offer an aggregated billing service will be adding significant value in the supply chain. The question is - how much will that service be worth? 

Today, if you want to pay for Salesforce.com monthly, you can get it with a finance charge through a select band of resellers or you can play really hardball with the vendor themselves and they will cave in if the deal is big enough. But will all vendors operate the same way?

What if the aggregators offered monthly billing to resellers but the resellers charged up front for 12 months? What if the aggregators bought all licences with 12 months in advance but billed monthly with a finance and service charge added? In general it means that software bought via aggregators will inherently be more expensive as the cost of the service and any finance will have to be added. This reduces the reseller margins. Some high end resellers will possibly be able to afford their own aggregation billing platform and make more money in the long run.

Most companies have not considered the transformation of billing services required to support the Cloud. Things are going to get complicated and most current billing systems do not perform well on monthly recurring billings and the burden on cash collections is heavier. Meanwhile, if cash collected is only one twelfth of the annual fee then cash-flow is hit a little harder for the reseller making that hyper jump to the Cloud all that much harder.

The end result is that there is a lot yet to play out in the world of Cloud software billing. Services like cohosting already have moved to monthly billing and cash but software has not. Will it really change or will the original SaaS vendors' models of annual collections up front pervade?

Will aggregators provide enough value to charge for their service to resellers and possibly end users? Will this new billing model negate some of the cost benefits and ROI that Cloud purports to offer over on-premise solutions? All this has yet to really play out.

However, if you run the numbers on Microsoft Office 365 over on premise Exchange or even Hosted Server Exchange, there is little or no cost benefit of moving to the Cloud. The only saving could be monthly billing and payments. Surprise, surprise - Microsoft's most popular payment method is 12 months in advance.

Either the end users are a strange lot or some assumptions about the monthly billing models are wrong. The answer has yet to be clarified.

Google Samples Reality

A friend and former colleague had a good adage about free products - 'They are free and worth every penny'.

It used to be my mantra when selling web and videoconferencing against the likes of Microsoft who allegedly (despite making over 40% net profits at the time) gave NetMeeting away free. Sure enough they stopped developing the product but it scuppered many a sale for me.

And so Google, the masters of 'selling' free products and services, finally stepped up and brought us a touch of reality - their version of a SmartPhone, the Nexus One. Sold either as a separate item or as an airtime bundle with T-Mobile in the US it is not cheap but it is meant to be an alternative to the immensely popular Apple iPhone. In the UK, it will be sold via Vodafone or Google direct.

The trouble is that Google has always offered support of its product via anonymous email - why expect more as their products are free, after all? Not so with the Nexus One - you pay serious money to get in on the act and Google were set to make handsome profits. But the real world intervened. Phones can go wrong and customers in the US are furious - filling bulletin boards and forums with complaints about lack of service and finger pointing by Google as neither they or their airtime provider can agree who should be taking the calls to service complaining customers - and Google do not have a line you can call.

Google must have watched Microsoft, who over the years have made lack of customer service an art form. Microsoft products are not cheap - a full MS Office suite for a home user, small business or even a Corporate User sets you back a pretty big sum. But try getting some support on the product and you have the delight of being referred to your PC supplier if it was bought pre-loaded or just sit and wait for hours if you bought it direct from Microsoft. And it's not as if Microsoft products are bug-free - some of the bugs actually were put in the very first versions and reside there today like antique quirks.

Google are vying to topple the likes of Microsoft and become standard applications in the world of Cloud Computing. To do so it has to learn a lesson that customers are fed up with the arrogance of the likes of Microsoft when it comes to ropey products and poor support. To make us all change, the alternative not only has to be 'fresh and cool' but reliable and well supported.

I hope Google get it right for the UK launch.

Is The Software World Changing?

Some while ago I did my personal review on why Software as a Service (SaaS) was gaining momentum. Since, I have looked at how Microsoft is now taking Cloud Computing seriously and how many big companies are beginning to open up to the benefits of changing the way they provision the enterprise for software.

The Changing World

The recession and credit crunch has taught everyone in business a major lesson - cash is really king. Of course, any wise businessman would have told you that all along but another lesson learnt from this recession is that many people who thought they were super businessmen got a short, sharp and nasty lesson in their own abilities. In that respect, the recession has been a humbling experience.

We have seen major gaffs on a mega-proportion where greed simply leads the way or desperation galvanises action which has terrible consequences. In the US, Bank of America (BoA) took over Merrill Lynch and the crucial negotiations are reputed to have taken less than an hour. Only after the acquisition did the terrible truth about Merrill's CEO, John Thain, come to light and BoA's Board looked like fools as losses were far greater than they were led to have believed and BoA CEO, Ken Lewis, lost his job. In the UK, a perfectly decent business in Lloyds Bank took over HBOS in mixture of greed, to get 28% of the UK mortgages, and desperation as, when the Board suddenly realised what they were taking on, no less than the Prime Minister stepped in at the eleventh hour to make sure the deal went through. In less then a heartbeat both companies sought bail outs and now the taxpayer owns 43% of the combined new group. Understandably, the Chairman, Victor Blank, has lost his job.

But down in reality-land we saw cash sources for business dry up dramatically and bull-headed CEOs and Sales Directors were quick to abdicate their responsibilities to Finance people and cost cutting consultants in an effort to make up for their lack of foresight and planning for the inevitable. Lots of executives will not lose their jobs, in fact, many will gain enhanced reputations for making 'tough decisions' which has resulted in an extra million job losses in the UK - a figure which is expected to rise by the same again in the next year. Only a few weeks ago we saw Steelmaking on Teesside stop as a single consortium pulled their contract which accounted for over 80% of the output - Corus and the Union blamed the customer but it was clear Corus had become fat and happy on the single customer. It was an accident waiting to happen.

Meanwhile, within the detail of costs, people began to question why they were outlaying large capital costs for software each year. True, the benefits theoretically are gained over a long period of time, but the reality was that if you are paying for an upgrade then you should only pay for what you use in terms of features and numbers of user plus the benefits should really be as soon as you flip the switch. Companies as big as Microsoft suddenly saw customers with light bulbs above their heads questioning their ludicrous licencing policy and for the first time in many years, Microsoft sales actually dipped causing around 5% of the workforce to be made redundant.

It was a massive wake up call to the software industry.

The World of Software

Major software purchases within enterprises have usually been treated as a capital purchase and in the accounts they have been amortised over a three year period as the benefits have notionally been gained over that period. This assumes a piece of software behaves much like a large machine. But a machine can be leased and so the capital can be saved and the cost taken as a lease in the overheads - cash is preserved. So what if the same can be done with software.

It would be a nice idea to think we could buy a thundering great software package through a lease but the reality is that once the software is installed it has no residual value in the eyes of leasing companies and so you cannot do this. The key to a lease is that if your company goes bust at least they have an asset. Software is not an asset.

So the concept of 'renting' software has become attractive. By not paying out a huge capital cost and recognising the benefits of using it as an immediate impact to the business by taking the cost to overhead, becomes an attractive proposition. Once again, cash is preserved and the accountants can see exactly what they are getting in terms of a Return on Investment (ROI) from day one.

With that in mind SaaS and Cloud Computing become attractive propositions.

The World of Salesforce.com

Long before the days of Salesforce.com, I worked at a company called PlaceWare and we sold online webmeeting software on a pay-as-you-go service - WebEx did the same. We had an easy, no cost to deploy model, that customers could try before they buy and then only pay for the numbers of seats they wanted on an annual basis. It worked fine for a non-critical application like webmeetings although we got in the ear when it failed, but what if a major critical application like CRM were to try the same?

Salesforce.com did just that. It leveraged a relatively low cost sales model of try before you buy, with an easy, low cost deployment and low entry point and again you only paid for what you used on a monthly annuity basis which included all upgrades, support and maintenance. A single monthly line cost which clearly showed the ROI instantly. Salesforce.com started by automating Customer Relationship Management (CRM) enabling sales teams to access the most up to date information about their customers instantly and anywhere they had access to the internet. Today, that means pretty much anywhere and so Salesforce.com is the crux of many an organisation which helps it run great rafts of daily activities by many departments from sales to marketing to support and link it directly in the ERP and Accounting systems so that a germ of lead can be tracked through the system to forecast to sale to invoice to commission payment.

Salesforce.com is a true enterprise application, hosted fully outside the network and 'rented' per user, per month.

Now, large scale enterprise applications like HR can be hosted offline the same way. Ex-Peoplesoft executives started a company called Workday.com with the same principle and many large companies are using it with the single largest ever order for SaaS from Flextronics placed with Workday.com last year. Former Astra Zeneca HR Technology Director, Mike Sheridan, is a big fan and now advises on the benefits and deployment of such innovative new technology and is a huge believer in the future of applications served in this way.

But it is the changing world of accounting which will drive SaaS to the next level. The technology is merely the technology and that always has its pro's and con's no matter where it is hosted.

Changing Perspectives on Risks

Beyond capital costs, the risks associated with large software installations have always been high. The risk involved in deciding on purchasing software has been pushed down the organisation and the potential heartache but also the thought of getting it wrong, botching the deployment or installation, delaying the benefits feeding through, cost of training and upgrade deployments start to worry executives who normally would not get involved. Take a CRM system - in the old days the IT manager may go and source the nice software for everyone to run. They might have chosen something like Siebel in the past and it would then have all the pain of taking legacy information into it, salespeople getting trained on how to use but on its vagaries. The sales managers could easily point the finger and blame the IT team if it went wrong. That has now changed as such decisions at least join in if not devolve to the sales managers.

They want lower risk options, easier to deploy, faster to get the benefits, low training requirements, and ease of upgrading - they want to minimise sales time wasted in the whole process and therefore not risk their earnings and therefore their jobs.

Salesforce.com was ripe for success in such an environment. While IT moaned about security, data ownership, cost of bandwidth, sales managers simply said 'do it' and the change was steam-rollered in. The same arguments apply today on other SaaS products and Luddite IT men fear for their skins as the enterprise is suddenly demanding less risk and more benefits - quicker. But the real force of change is coming from the Finance department, who are questioning the need for capital outlays and the real ROI of major enterprise software implementations - they also want change.

The recession and credit crunch has been 'The Perfect Storm' to get this driven into business minds.

The Dying Art of Selling

What SaaS has done is to reduce the cost of the sales model. The concept of ease of trial, deployment and 'sales consulting' has meant that fewer, less costly salespeople have got involved. Still today, Oracle or SAS salespeople can earn upward of £250,000 a year for their skills. A Salesforce.com salesperson is less cost to the business as many points in the sales cycle are eliminated. At PlaceWare, we were able to quickly achieve $1m of quarterly annuity revenue on just 4 salespeople costing less than £250,000 a year to run in total. At any time, we had over 1,000 people trying before they bought so that we could concentrate on doing demos, helping people see the benefits of buying more licences and focusing on the larger deals. The next batch of deals were taking care of themselves via a neat free version called 'My PlaceWare' which over 15,000 accounts worldwide were using. It was the perfect sales funnel.

Longer term, this is a good trend. I have always challenged the skills of selling large scale enterprise software as a capital cost vs. SaaS - I think you need equal skills because ultimately you are solving the same problem and producing value to the customer - the skill is proving the value. I would match any SaaS salesperson against the £250,000 heavyweight because they just sell by the book - the tried and trusted 3 year ROI model which neatly hides a million issues. SaaS means you work harder on showing the ROI instantly - it's all about proving real, instant value. And that's a growing skill that requires heavyweight thinking but in a faster moving, less cost and agile salesforce.

It is like the trend to lower equipped, faster to deploy, lightly armed specialist troops in war rather than the heavy batteries of the past. The benefits are much faster to see for less cost.

Subscribing To The Future

The idea of paying for software by a monthly or quarterly subscription answers many of the questions on consuming capital unnecessarily. But it brings further benefits as companies can faster measure the ROI the software brings, while it provides a far lower risk method of deploying such solutions. But add into the equations that it also means that companies have wider choice and bargaining power. Just as the decision to buy is made easier and less risk by trying before buying, so to the cost of change is made easier. True, there is legacy, but the power moves back to the enterprise to make sure the solution continues to meet ROI benefits and that the software continually matches their needs. The issue that many have with a Microsoft is that you pay for far more than you get in terms of added products not used in the 'Stack' or for all staff when only a small percentage are using the software at any one time and many departments not at all.

SaaS allows you to drill down to every feature and every user - you only pay for what you use.

It also means that flexing up the model becomes far easier - the cost of infrastructure for delivery is absorbed by the vendor so you only pay for each new licence when you need not new servers when you reach limits. Software subscriptions provide the benefits of accuracy of billing while enjoying the benefits of easy scaling - up or down.

This is another reality of the recession. As companies clamour to take cost out of the business as staff disappear through redundancy, while they get payroll cost savings they do not save in the cost of software paid for them. Wrapped in those enterprise software agreements is no provision for return of 'licences not used' or 'no longer required'. In fact, all the software brutes look to get incremental sales each year regardless of staff size. SaaS allows you to scale both up and down - you simply vary the numbers of licences as and when. It means that in a recession, you can make not just cost savings on payroll but on services provided to the individuals too - immediately. This is something accountants will remember for the future as slashing costs associated with staff never quite hits the cost of a Full Time Head as dictated in the budget as most actually include these costs as well.

SaaS Should Never Have Got Off The Ground

When you think about it, SaaS should never have got off the ground. There was no big recession to drive people to think this way or a compelling requirement by IT of the business to go to a rental model. It was perhaps the innovation of entrepreneurs on the West Coast of America who thought about how to start up companies for lower costs without having to pay for big increments in infrastructure and licences every time they had added staff. There had to be a better way to get off the mark quickly, remain lean and be flexible to grow and take advantage of best in class software and the benefits to be gained.

It's why Salesforce.com revolutionised the way companies think. The whole concept of effectively outsourcing the entire CRM system so that salespeople just had laptops, a car and no big databases to refresh each evening across expensive, secure networks was only the start. The whole process of running a salesforce could be outsourced and that's when SaaS got to the enterprise and became mission critical.

Lots of people complain that SaaS is open to the vagaries of the internet and in the early days this was a huge problem to the likes of Placeware and WebEx. But the world has changed. We hear loud shouts when Google's Apps go offline because it is a rarity and it affects lots of users. But how many times on a corporate network do we say to one another 'Email is playing up', or, 'the network is slow today,' or, 'I can't log on,' or, 'I can't get at that data', or worse still, 'I haven't got the most up to date data.'

The fact is that SaaS is here and now. It is always the freshest data, the latest revision of software and is available where ever you are, whenever.

SaaS - Right here, Right Now

The recession has taught a lot of things, but as always it is whether we actually take on board the learning. Certainly, one of the most powerful messages is that availability of capital is paramount to survival - it dries up and your business contracts, instantly. SaaS brings the ability for companies to conserve precious cash, scale up and down at will and be ready to meet the world with best in class features, every day.

SaaS is literally right here and right now - there has never been a more compelling reason or time to take a close look.

Microsoft's Head In The Cloud?

Following up on my article about SaaS and Cloud Computing yesterday, it is worth knowing what Microsoft are up to.

A senior source at Microsoft told me last year that Microsoft believe that delivering all their Office Suite of products to Small and Medium Businesses (SMEs) is a priority and could account for up to half their business in the future.

Of course, as usual with Microsoft, no one quite knows when that future is - as we have just seen on typical announcements about new product version availabilities.

Azure Tinted Glasses

Microsoft's firm strategy to tackle both Google and Amazon's significant advances on Cloud Computing Services are in the form of a new online operating system called Azure. In the race to secure this ground, Azure is seen as Microsoft's major play for the future.

But Microsoft loves mixed messages. Steve Clayton, Head of Software and Services at Microsoft International has said that on-premises products are still very much part of the future. Citing Google's much publicised recent outage, he pointed to the fact that reliability is still a key issue.

That comes as pretty laughable from a company that produces an operating system that is subject to virus, phishing and hacking every day due to its lack of security and whose products regularly crash mid session (as I type I have a frozen Internet Explorer open on my machine that has 3Gb of memory and XP). An outage at Google is massively publicised yet Vista users every day encounter annoying problems which impact productivity unnecessarily.

But that's Microsoft for you - follow Steve Ballmer's advice 'Microsoft is the answer, now tell me what was the question?'

Online Applications Soon

What Clayton did concede is that Microsoft Dynamics CRM and SharePoint will be online soon.

I am not sure about everyone else but I have found applications like OneNote and SharePoint to be very exciting and then very disappointing. SharePoint has lots of 'cool' features, particularly very good dashboard facilities but as with so many Microsoft products it solves parts of the problems and then leaves gaping holes with no attempt to plug them. Sold as an Action Tracking style system it pails into insignificance when matched with say ActionBase yet the two work well together to solve the bigger problems.

Dynamics is similar, a poor man's version of Salesforce.com it neither gives you the features you need nor the integration - Salesforce.com is way in advance. Yet all of it comes with the Microsoft tag and that has enormous clout for many Corporates as I dare say Azure will have when it finally arrives.

Until then Google and Amazon are way out in front on Cloud Computer facilities and I recommend that, if you are a small business concerned about the cost of scaling your business up and down, then Cloud Computing is well worth considering.

Laptop Only Required

As a veteran of the SaaS (Software as a Service) industry, I can tell you everything is rosy until the darn Internet gets in the way. For all the benefits in the world you just need the unavailability of the Internet for a short while to evaporate the lot.

Or so it would seem. Recent studies on availability of Exchange Servers or inhouse networks show that internal network or component failure is more common than major Internet outages and it's just that they are seen as 'usual events' rather than complete failure to work. Anecdotally, how many times have you been told that a business or individual within has had trouble sending or receiving mails or lost important data or files, worse still, has had major applications inaccessible for periods? It seems that internal shortcomings of applications or networks are so run of the mill as to go largely unreported - yet the self same people who experience that level of poor internal service are the first to speak out against the advance of SaaS or the new phenomenon of Cloud Computing.

The Growth And Dangers Of SaaS

Salesforce.com is one of the major successes of SaaS and it has popularised the use of high availability centrally accessed information for particularly mobile users. As a former user of Salesforce.com, I can safely say it is streets ahead of all other dedicated applications for contact and sales management I have ever used. The beauty was that whenever I logged on I had direct access to all my information, with the latest revision of software and in the form of the application itself so I could do all the things I needed to manage my own contacts and my those of my reports anywhere in the world.

And with the growth of Mobile Broadband, it means that you can do this without the need to be static. Now you can go onsite to a customer presentation or meeting and have full access to all information needed and you can catch up and work in a coffee shop or over lunch, while updating the central database for everyone else to see what is going on.

The obvious downside is the reliability of the connection or availability of the Internet or more frustratingly, if the Vendor suffers an outage or failure at their end. It has happened - as recently as January Salesforce.com suffered problems leaving 900,000 users without access to their application and information while Citrix, Webex and others have had problems. In my particular companies, Genesys and PlaceWare (now InterCall and Microsoft RTC respectively) we had many instances of failure.


Cloud Computing is an extension of SaaS - it is also the concept of having online storage and processor power highly available, as an when you need it. This is a superb solution for small businesses who find it difficult to cope with the cost of scaling their business - particularly if you have to start flexing server, storage or licence muscles in order to cope with growth. At early stage, the cost of adding an incremental, fully kitted out user is very high in proportion to over all costs, once you have grown to a certain size, the cost as a proportion to overall costs gets progressively smaller. Equally, the cost of failure of any one component is disproportionately high or the cost of insuring against such failure. Maintenance contracts are at minimum 20% of the hardware value which typically over 3 years amortisation is cheaper to replace and this does not allow for the cost of application support.

Cloud Computing takes that strain away. With the growth in things like Google Apps, you can not only have a full suite of Office applications at your finger tips, but all the associated storage and computing power needed, anywhere in the world for a single monthly fee. It takes the hassle away of worrying about scaling as it is simple and less of a proportion of your costs, while maintenance and upgrades are taken care of and the whole system gears in size in exact proportion to your own requirements at every step - there are no sudden jumps as you go from 100Gb to 1Tb storage or requiring a new server as you hit the limit of the old one - it's all taken care of for you.

I dealt with one client in the US that had 20 staff in 20 different cities in the US allowing them to 'appear' like a national organisation and they supported the whole lot through Cloud Applications even their Accounting System and Budget/Forecasting system as well as classics like Salesforce.com. No need of an internal network or costly server, everything was hosted in the cloud complete with a hosted VoIP centralised phone system from RingCentral. Meeting me at the IOD Hub in London he showed me how he could run his business in exactly the same way from London as in California, right down to answering the phone.

I also host my Exchange server at Fasthosts who also host my web site - this means that anywhere in the world, as a small business, I have full access to a full Outlook client as if I were on my own network, fully maintained and backed up for me for a single annual cost which allows me up to 10 email accounts and plenty of storage - and it is a fraction of the cost of having my own server with maintenance and storage - plus someone to run and support it for me.

I also use Spare back up which automatically runs each day no matter where I am and backs up all files which have changed and I can restore any I accidentally lose at a single touch easily - this covers all my PCs for a single charge of £29 per year for a huge storage space that I have only used 19% of so far.

Not Just For Small Businesses

In ComputerWeekly last July, Taylor Woodrow announced they would be migrating all 1,800 employees from traditional desktop applications to Google Apps. The estimated saving to the company would be £1m over 3 years according to Rob Ramsay, the IT Director, just on Office applications. He said that Google Apps will allow Taylor Woodrow to scale up and down much more easily and in a more cost efficient way.

In these tough times, Rob Ramsay's logic is sound. Not only does Cloud Computing support expansion efficiently but also contraction. This recession has hit very hard with many industries having to lay off staff. When that happens, typically the money spent on supporting the staff lost is itself wasted or at least until the company can re-use them again. In things like Microsoft Office licences, you typically pay an Enterprise licence fee so you are stuck with the cost whether the people use the licences or not. Cloud Computing allows you to simply add up the numbers and pay for what you use only, so downsizing actually produces savings, while scaling back up for the upturn becomes a less onerous task in terms of people time and cost.

New Kinds Of Business

Cloud Computing is also allowing the introduction of new types of business. Huddle is an Enterprise 2.0 start up that not only uses Cloud Computing for its own use but uses it to deliver services to its clients, some of whom are Boots, Centrica and MasterCard. Huddle is a secure, online collaboration and networking service for companies of all sizes - not dissimilar to the likes of Citrix and Webex but it started because of Cloud Computing.

If you use applications like LinkedIn or Facebook as your contact management system, then you will understand these are also gifts from Cloud Computing as is Google Apps. With packages like Huddle, Webex, Yugma or Skype plus applications like Vonage or RingCentral or Yak.com you can have a full communication and collaboration suite at your disposal for a reasonable cost without the costly outlay for capital purchase or lease of telephone equipment and use your PC or WiFi or mobile phone as your only telecom apparatus. Accounting packages like http://www.freeagentcentral.com/, budgeting packages like http://www.adaptiveplanning.com/ or CRM packages like Salesforce.com start to complete the picture - you can have your entire business run by a single laptop, anywhere in the world for monthly charges.

High Availability, Low Down Time

The Internet has come an awful long way since the heady days when I ran PlaceWare Europe Ltd. Then Internet outages were rare but frequent enough to cause angst and doubt in customers' minds. Things have changed dramatically and now the Internet is nearly ubiquitous with the advances in WiFi and mobile broadband. As a small business, I am completely reliant on access to the web and I don't have a problem with it, being able to work offline when required and online when I need to with equal effect and a fraction of the cost of if I had to fund and maintain it all myself.

Now is a good time to consider the alternatives, whether you are a large business or small. Feel free to give me a call or drop me a mail if there is anything you would like to discuss further on +44 (0)207 193 2356 or nigel.dunn@calxeurope.com.