Cloud services – the Potential Cost Savings for a Small Business

Cloud computing is all the rage nowadays. It’s the topic of conversation in offices across the world. It doesn’t matter what industry you operate in, or even the size of your company. It’s very hard to find a business out there that doesn’t use a single cloud service. Given that cloud computing has made inroads in every business process and functional domain, that’s not a surprise.

Moving to the cloud for a particular process or task offers many benefits. Improved efficiency, new product features or even entirely new service models have emerged thanks to the cloud. But the single biggest aspect that has companies looking to the cloud is cost savings. How much you can save will depend on many variables like the size of your business, your requirements, which particular process you’re going to switch and so on. Let’s take the example of cloud VoIP to see how this plays out for a small business.

How Much Can I Save?

This is probably the first question any company asks when considering the cloud. This is where Total Cost of Ownership (TCO) comes in. You shouldn’t just think of the costs involved in the beginning. You need to compare all the costs you would incur over the useful life of the entire system.

Capital Costs

The most obvious cost difference is the initial infrastructure outlay. The capital expense involved in buying new hardware, software licenses, peripheral accessories and additional tools can be quite high. You’ll need to pay for phone services, buy new phones, a PBX box etc. if you start from scratch.

With the cloud, all that disappears. In most cases, all you need is just a high speed Internet connection with a reliable backup option and you’re all set. The cloud VoIP provider is the one who has to purchase hardware and provision services for you. SIP compatible phones are not very expensive although you do have high end models costing hundreds of dollars. All PBX features are delivered online, so there’s nothing for you to buy!

Operating Costs

That’s only one part of the story though. You also need to consider operating costs. The costs of operating your own on premise phone system can be very high for a small business. This is because you don’t have the benefits of economies of scale. Suppose a device supports 10 users at a minimum. If your business has only 3 employees, you’re effectively paying for extra resources even though you don’t need them.

A hosted VoIP service lets you purchase the exact number of lines you need. Not only that but you can add or remove them depending on your needs. There’s no minimum payments and no contracts to worry about. You don’t have to wait until the end of your billing cycle either. Add extra numbers for peak season and remove them once demand is back to normal. There’s no need to have resources lying around just in case you might need them!

Something else that businesses don’t consider is the people costs. If you run your own phone system, you need staff that can deploy and maintain it for you. As a small business with 15 employees, can you really afford a separate IT department? Cloud VoIP is also sometimes referred to as managed services because everything is handled for you by the provider. That alone can be a big relief for business owners, not to mention the cost savings!

Indirect Costs

For a business, wasted time also translates to extra costs or the loss of potential revenue. Suppose demand increases from your customers all of a sudden. You need to add more lines but provisioning extra takes a few hours. Until then your phones are jammed and many people can’t get through to place an order. Just imagine all those lost sales!

What about downtime? Cloud providers offer service level agreements with minimum guarantees of uptime. Scheduled maintenance, unexpected downtime etc are all accounted for. So you don’t have to worry about your system going down during work. Cloud vendors are often quicker to provide new features since they’re constantly upgrading their back end equipment and improving their service portfolio.

It is difficult to say exactly how much you could save by moving to the cloud. Some companies offer calculators on their sites to calculate approximate savings. You can enter in your business information and see how much you could potentially save. Switching to cloud services makes a lot of sense for a small business, especially if you’re not an IT centric company in the first place. If you provide tax consulting services, does your staff really need to worry about the phones? You would be better off deploying those resources – people, processes and technology – in revenue generating activities instead. One thing is true – moving to the cloud will certainly cut down your bills!