ADOTAS – Dr. Seuss’ famed children’s fable How the Grinch Stole Christmas tells the story about the Grinch’s attempts to ruin the holidays from the children of Whoville by stealing their gifts and decorations. As in most fables, the Grinch’s diabolical plot is foiled. If only it were that simple in the real world.
2011 has been challenging for most small to medium businesses, and business in general will enter 2012 under a cloud of uncertainty. While some industries are seeing an increase in demand, most businesses are trying to hold out, awaiting an improved climate. There seems to be little opportunity to raise prices in a market where customers are demanding lower prices on goods and services (see my earlier blog post on “The Economic Squeeze”).
As businesses recognize 2012 won’t likely see increased revenues from a raise in pricing and fees, the pressure to reduce costs will continue to grow.
Despite the fact that there is a large pool of unemployed people, most businesses have actually seen an increase in their cost per employee. This has resulted from reducing staff that are either undertrained or not required for survival, and in turn providing raises for critical and trained employees, to keep them on board. Not to mention, these key employees, by and large, have been asked to fill the gaps created by the reduced worked force.
While on the surface this increase in cost does not seem logical, it is, in fact, vital. The loss in valuable, trained employees can have a long-term negative impact on any business. Chris Robertson of internet marketing company Majon International points out, “The productivity gained by maintaining a well-trained workforce, even in difficult financial times, can’t be overstated. When machines, desks or computers sit idle, productivity will eventually flatten and it could be nearly impossible to recover your momentum.”
So where is a business to cut? Fixed costs won’t change, we can be assured of increased health care costs, and given the gridlock in Washington, D.C., taxes remain the great unknown for the foreseeable future.
Talk about the cloud seems to be the topic du jour, as it provides a formula for reduced fixed costs, increased per-employee productivity and a PAYGO model. Yet a survey from ITC service provider 2e2 found that 57 percent of businesses are undecided about adopting cloud services. The reluctance is reported to be centered on concerns for security and reliabilit and a fear of the unknown. The term ‘the Cloud’ might be daunting but in truth, most businesses already rely on the cloud for many services (email, online payments and billing, file sharing and banking, to name a few) and employees are using the cloud with or without their employer’s permission. According to a Forrester survey published earlier this year:
- 37 percent percent of workers claim that they’ve used their own PC or smartphone for work.
- 26 percent have purchased work-based software or other technology with their own money.
- 15 percent of users have downloaded unauthorized applications to their work computers in the past year.
- Of that 15 percent, 67 percent have used two to five unauthorized applications for work.
As with any critical purchase, security and reliability concerns need to be addressed by selecting a vendor that has the history, reputation, and a loyal customer base. Businesses rely on their cloud vendors’ security expertise, since they often don’t have enough, if any, security personnel on staff, and they realize while it might seem comforting to keep your cash under your mattress, relying on the expertise of our banks to manage financial resources is smarter.
Perhaps we need to look at the cloud as a utility and not as a product or a service. Years ago, we dug wells for water and fueled our factories with coal-burning furnaces. Now, you turn on the tap and get all the water you need, and you can plug an extension cord into the wall and electricity is there. We pay only for the utilities we use, increasing and decreasing as demand dictates. Think of the cloud as a wireless plug for all your computing solutions.
As a recent article in the Harvard Business Review noted, “One simple example is when a service is needed only 10 hours per day, five days per week. The cost of owning the servers and applications the 118 hours per week they are not in use is not a good allocation of funds for many businesses. Many cloud providers allow bringing up services when they are needed, and bringing them down when they are not.”
Most small businesses and enterprises don’t require their cloud provider to handle voluminous end-of-month runs that are required for enterprise companies, but the cost benefits are the same. Take a company that, in order to secure a new contract needs to partner with another vendor on a one time basis. The project requires the company to build a new intranet to host CRM, knowledge base, conference calling and file sharing to be used by a large team for a fixed period of time. To purchase these tools would add costs, and implementing them would take significant man hours. Utilizing the power of the cloud, all this could ramp up within hours, and the company would only need to pay for the apps required for the length of the project. And since all the data is in the cloud, these partners are not required to be under one roof — they can share the data, collaborate and ramp down when the project is done. Your business can compete against larger competitors for projects without investing significant dollars.
This is the time of year where we are inundated with talk about gifts: what to buy, where, for how much and for whom. The cloud provides small businesses and enterprises with the gifts of money (reduced costs), time (increased productivity), mobility (the freedom to work from anywhere, from any web-enabled device), immediacy (you can provision a new service instantaneously) and control (you pay only for what you use). The cloud provides a competitive edge that can make the difference between a stellar 2012 or a repeat of 2011.
The Grinch from the fable tried to steal the joy from the Whos. Don’t let the hesitant Grinch steal your business’ 2012.