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    Banking Services
    Cloud Computing: What It Is, How It Could Help Your Business
    If you peruse web sites or other media about technology-related subjects, you probably have seen references to cloud computing, which has become the buzzword of the hour. But despite its prominence, the concept of Cloud Computing is often murky, both in presentations and in the minds of computer users. This article attempts to define the subject, and to present both benefits and potential risks from the perspective of a small business owner.

    August 2012

    Cloud Computing Defined

    Cloud Computing is a computing model that permits users to access resources such as software, servers, storage and others via a web browser. These resources are housed at remote locations, and the term "cloud" refers to an infrastructure that ties them together in a way that is seamless to the user.

    Instead of locating these services onsite and hiring employees to oversee them, a small business pays for Cloud Computing by subscription based on the number of users, frequently on a monthly basis. Certain large vendors, such as Microsoft, Google, and Intuit, offer packages that may include word processing, spreadsheets, e-mail, data storage, groupware, calendars, server access, remote security, billing, and others.

    There are two types of cloud computing models:

    • Public cloud. This type of cloud service is maintained by a vendor selling a product or service to a sizeable customer base. Examples include Microsoft Office 365 and Google Apps. A public cloud permits a small business to access technology resources quickly without investing in servers or personnel, a plus when an organization is small or is in start-up mode.
    • Private cloud. As its name suggests, a private cloud is maintained for one organization, either by the organization itself or by a third party. A private cloud may exist onsite or off premises. Because a private cloud requires more knowledge and resources to maintain, it may not be viable for a very small organization that lacks the technology expertise to develop and oversee it.

    The issue of a public cloud versus a private cloud need not be an either/or choice. Your small business can maintain a private cloud for sensitive data, such as customer information, and access a public cloud for other uses.

    Advantages of the Cloud

    Cloud computing presents many potential advantages for a small business, including the following:

    • Centralized software and management. Cloud Computing vendors take responsibility for software upgrades, security patches and other ongoing maintenance issues. As technology applications become increasingly robust, a Cloud Computing model removes the burden of building and maintaining applications.
    • Easy remote access to technology resources. Any business with a web browser, which in this era is virtually everyone, can get started in Cloud Computing.
    • Potential for cost savings. Depending on the situation, a Cloud Computing model has the potential to reduce capital requirements, lessen energy and power consumption, and consolidate technology infrastructure.

    Potential Risks

    There also are potential drawbacks that users need to understand.

    • Security breaches. It is important to ask Cloud Computing vendors about security protocols. Determine whether a vendor implements multiple layers of security, employs firewall controls, restricts access and practices other commonly-used procedures. If you select a Cloud Computing model, your vendor may assist you in connecting securely to the cloud.
    • Service interruptions. Vendors should maintain redundant servers and implement other practices that attempt to maximize customer access.
    • Vendor instability. There is always the potential that a Cloud Computing vendor could discontinue a product offering, raise prices, be acquired or experience another business issue that is not to your advantage. Try to determine a potential vendor's financial strength and ability to grow along with your business.

    Getting Started

    If getting a start in Cloud Computing has potential benefits for you, the following tips may be helpful in your implementation.

    • Start with a plan. Make sure your technology roadmap supports your vision for how you want to grow and manage your organization.
    • Consider beginning with a single cloud application. This approach could help you gain experience on a relatively small scale, which will be valuable when moving more applications to the cloud.
    • Try to learn about Cloud Computing before creating your technology plan. You may be able to find resources online, through business networking groups or at a local educational institution.

    Cloud Computing presents many benefits, and a thoughtful approach may help you make the most of them.

    © Citigroup Inc. Citibank, N.A. Member FDIC