How Cloud Computing Can Help Small Businesses

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Google has Google Apps, Google Docs, Google Sites, and Google App Engine. Microsoft offers a service called Azure. But there is a sizable group of smaller players as well. These include such companies as 3tera and 37Signals, one of the best-known small providers specializing in project management applications for entrepreneurs.

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NDH Group, a 12-person, $5 million accounting firm in Chicago, wanted not only to serve as accountants for its small and midsize business clients but also to perform CFO duties for them. The multitude of different software packages used by its clients, however, and the necessity of accessing them remotely was a huge hurdle. NDH used a dedicated portal from Intacct, so the firm could get real-time updates on its clients' financial reporting. "The complexity of setting up the infrastructure in the [old] client server world would have been extraordinarily difficult," says Seth Pomeroy, NDH's partner in charge of CFO outsourcing and accounting technology. The outsourced CFO service now accounts for about 65% of the firm's business. Adds Pomeroy: "There is no way we could have done 10 years ago what we are doing now."

Seattle's 1000 Markets, which provides online marketplaces for artisans, is using cloud computing to create a virtual company. The 10 employees of the $10 million company are scattered throughout the U.S.—from Boston to rural Tennessee and from the mountains of Colorado to Puget Sound. "We have no central office, and the only hardware we own is the laptops and desktops we have at home," says Matthew G. Trifiro, the company's founder and CEO. "All of our servers and other capital infrastructure is outsourced. That is our growth plan for the company."

The company runs 100 online marketplaces and has to manage large swings in customer demand. It also has hundreds of thousands of images that need storing, and it must be able to process customer payments. "We don't want to be in the business of buying hardware and determining routing optimization and load balancing," says Trifiro. Instead, he's using two cloud computing providers: Engine Yard handles the load balancing and page serving, while Amazon does image storage and payment processing. In this way, Trifiro says he has saved $30,000 on servers, not counting the cost of a techie to oversee them. His current yearly expense on cloud computing, while about $70,000 annually, "is not anything like what it would be if we had to do it ourselves." Now they can concentrate on their business instead.

For a related special report, go to businessweek.com/go/sb/cloudcomputing

Return to the BWSmallBiz August/September 2009 Table of Contents

Quittner is a staff writer for BusinessWeek in New York.

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