Contributed Column

All About IT

The Vermont business forecast: Sunny with a strong chance of clouds

by John Burton, NPI

In case you haven’t noticed lately, quite a few Vermont businesses are moving a fair share of their data to the cloud. Cloud computing provides IT hardware and software as a service delivered through the Internet.

This change is analogous to what happened in the 1900s when businesses switched from generating their own electricity to purchasing from utilities. Recent innovations like inexpensive broadband, server “virtualization,” and newer browsers have enabled the utility computing era.

Moving to the cloud involves little upfront capital, works great for road warriors, and permits business growth (or shrinkage) when going through formative years due to an elastic “pay-as-you-go” pricing. Many businesses find this approach fits better than buying IT resources in advance and facing periodic “refresh” cycles. Much interest is driven by an increasingly mobile workforce and global business environment. It may be a bit surprising, but for many small Vermont businesses at the vanguard of this change, this makes perfect sense.

Cloud offerings are available from big players (think Google, Microsoft, and Amazon) down to scrappy upstarts, enabling the cloud to mature into a viable alternative. A recent local cloud event demonstrating the power of new Microsoft offerings received strong interest from a variety of businesses. Many already use the cloud for email, intranet, and video conferencing services as well as spam filtering and backup. They seemed less interested in product ownership, which fits right in with the “Zipcar” philosophy of consumption. Some voiced concerns about future fee increases but recent pricing history has been a race to the bottom. Vendors know that the Internet also facilitates ease of data movement, often to the lowest bidder. As a result, for many Vermont managers cloud technology is a priority for 2013.

Some prominent geeks warn that the cloud faces a rocky road due to digital data rights and increasing security concerns. Google’s business model charges less but allows it to “mine” the data for trends. Most doubt Google will compromise key data, so accept this tradeoff. The question is, Who cares about the most boring of business transactions anyway? Others pay more for a provider that assures the highest of security standards. Some companies employ independent cloud-based security partners. There are even experts who believe cloud providers will improve the typically weak security posture of small businesses.

Another helpful security measure employs encryption, making data unreadable without the encryption key. Most cloud backup options enforce security through strong encryption and even store data in two hardened “silos” hundreds of miles apart.

Contract negotiation skills are key when engaging cloud providers. As with a marriage, understanding the relationship and structuring win-win contracts is the key to success. Read and understand the terms in your Service Level Agreement for response and operational details. Consider using a lawyer skilled in the growing field of cloud-based contracts. Another risk-reduction strategy is to verify that your critical Internet infrastructure is robust and well supported. Adding multiple connections helps assure the Internet is highly available. It makes great business sense to hire a professional consultant to be your guide when navigating the cloud startup process.

Despite the challenges, the cloud provides a rare technical discontinuity that may level the playing field between big and small businesses. This could help Vermont small businesses compete on the international stage. In the coming years cloud technology may even dramatically change how businesses are structured and operated. Looking back in 2025, we may realize that the cloud created a sea-change in the business landscape, with implications that will create even more competitive opportunities for Vermont businesses.

John Burton is a co-founder of NPI — Secure Managed Voice & Data Services in South Burlington. www.npi.net.

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