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Cloud Computing And Smes Add in library

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How do SMEs use IT? Can these functions be put in the cloud? Why would SMEs put a function into the cloud? What problems are there with putting IT functions into the cloud? Briefly describe a small business and recommend what functions should be put into the cloud.





Cloud services are one of the most useful innovations, which have taken place in context of information technological landscape. Cloud services can be defined as those information resources such as virtual storage space etc. which are provided over internet. Two most common cloud service resources are SaaS (Software as a Service) and PaaS (Platform as a service). Purpose of this essay is to understand the important of cloud services from perspective of small and medium sized enterprises (SMEs) in Australia (Sultan, 2011).

SMEs and their way of using IT

With SMEs it is important to understand that in majority of the cases they have financial constraints (Sulistio et al, 2009, pp.583-588). Due to which their expense on IT infrastructure and services is mainly focused on the approach of ‘as-per-need’ basis. Based on survey it was found that SMEs in Australia, it was found that majority of them use IT to fulfill their basic business requirements such as sending mails, maintaining information database and managing their project through project management software applications (Karabek et al, 2011). However, with rising competitive pressure, there are several SMEs which are unaware about their future IT strategy. No doubt that use of information technology is a major business enabler, but it is cost intensive as well, for which SMEs might not have capital at times (Marston et al, 2011, pp.176-189). Hence, use of IT in SMEs remains scattered and potential of IT tools and applications is yet to be harnessed completely for improvement in efficiency. In nutshell, SMEs use of IT is focused on information communication through e-mails and storage of their critical business data. Moreover, SMEs rely mainly on enterprise level software to fulfill their requirement related to IT.

Can these functions be put in the cloud?

It is clear, that SMEs have tremendous scope of expanding their IT functions to cloud services (Jadeja & Modi, 2012). In a way, SMEs are already using one major cloud service to fulfill their need of communication, i.e. webmail applications such as Gmail and Hotmail. This was also revealed by the survey which claimed that out of 900,000 SMEs most of them used cloud services in form of webmail. Another important IT function of SMEs which can be put on cloud is their storage requirement. Whether it is project related data, or employee data, information in SMEs is stored on local storage devices, which have risk of getting damaged or corrupted, and also results in cost for the business. However today, there are several service provides which provide customized plans for SMEs for their data storage related requirements (Rath, 2012, pp.688-691). Hence, SMEs can shift their data storage function to the cloud. Another important IT function which can be shifted is the use of enterprise software. For example, services provides such as etc. provide entire suite of human resource (HRM) applications and customer relationship management (CRM) through internet, which means that SMEs just need to have an internet connection and a basic computer, rather than having complex setup of IT infrastructure to fulfill these needs (Kshetri, 2010). Hence, enterprise requirements such as CRM, HRM etc. can be easily shifted to the cloud functions.


Why would SMEs put a function into the cloud?

Main reasons behind a SME putting its IT function into cloud is cost efficiency, convenience of use, and freedom from setting up expensive IT infrastructure (Wang et al, 2012). For any particular SME capital investment is always a complex process that is why money being allocated on IT related expenses are always seen as an extra expense, which SME try to curtail most of the time. In this process of controlling the expense on IT infrastructure, SMEs often expose their data integrity and overall IT infrastructure to security issues such as hacking etc. However, main motivation behind SMEs for putting IT function into the cloud should be cost factor as it will help them to optimize their operational cost (Etro, 2011).

What problems are there with putting IT functions into the cloud?

According to survey conducted in Australia, more than 52% of the cloud users raised their concern for the security of cloud services. In fact worldwide, security of the cloud services has been the major concern for majority of the enterprises. There are several SMEs in Australia which are active in financial domain and supporting various financial service of their client (Chawla & Sogani, 2011). For such firms, security of their data is of utmost importance. Hence, shifting their data related requirement to cloud services is seen with skepticism. Another important problem with cloud services is its availability and dependency on internet. At times it has been observed that any type of disruption of cloud services can completely bring its subscriber’s business to standstill, which is always a risk. Another major problem is dependency on internet. All the cloud service is rendered through internet services, which is provided by third entity known as telecommunication service provider. Hence, any disruption in the internet services might completely halt the cloud services, even though majority of the cloud services claim for almost 0% downtime of their services, but in technology disruption at any level is possible at any time, which always remains major concern related to use of cloud services.

Case study of small company & recommendations

Company which is being analyzed is Globoforce, which is an HR consulting firm, this organisation has 93-95 employees. Globoforce being a HR consulting firm doesn’t have any enterprise level software to manage its internal human resources, which it manages through excel file based data and other unstructured files, such approach poses risk of data lose and other issues in long run. Hence, for Globoforce, first recommendation will be to shift its human resource related function to a cloud service such as ZOHO HRM or any other cloud service provider which provides HRM functions. This will enable Globoforce to centralize its HRM functions in a more structured and efficient manner. Another, cloud service which Globoforce can use is the incident management applications.

For example, currently any customer lead and information related to it is managed in unstructured files. Hence, for this purpose Globoforce can use services such as JIRA which is an incident management tool available as cloud service. This will enable Globoforce to efficiently handle its customer related issues and information, and will also enable to enhance the customer service experience, which will be beneficial for the business.



Chawla, V., & Sogani, P. 2011. Cloud computing–the future. In High Performance Architecture and Grid Computing (pp. 113-118). Springer Berlin Heidelberg.

Etro, F. 2011. The economics of cloud computing. The IUP Journal of Managerial Economics, 9(2), 7-2.

Jadeja, Y., & Modi, K. 2012. Cloud computing-concepts, architecture and challenges. In Computing, Electronics and Electrical Technologies (ICCEET), 2012 International Conference on (pp. 877-880). IEEE.

Karabek, M. R., Kleinert, J., & Pohl, A. 2011. Cloud Services for SMEs–Evolution or Revolution?. Business+ Innovation, 1.

Kshetri, N. 2010. Cloud computing in developing economies. Computer,43(10), 47-55.

Marston, S., Li, Z., Bandyopadhyay, S., Zhang, J., & Ghalsasi, A. 2011. Cloud computing—The business perspective. Decision Support Systems,51(1), 176-189.

Rath, A., Mohapatra, S., Kumar, S., & Thakurta, R. 2012. Decision points for adoption cloud computing in small, medium enterprises (SMEs). In Internet Technology And Secured Transactions, 2012 International Conference for (pp. 688-691). IEEE.


Sulistio, A., Reich, C., & Doelitzscher, F. 2009. Cloud infrastructure & applications–CloudIA. In Cloud Computing (pp. 583-588). Springer Berlin Heidelberg.

Sultan, N. A. 2011. Reaching for the “cloud”: How SMEs can manage. International journal of information management, 31(3), 272-278.

Wang, H., He, W., & Wang, F. K. 2012. Enterprise cloud service architectures. Information Technology and Management, 13(4), 445-454.



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