Does Moving to the Cloud Pay Off?

I’ve just written a small-business guide to the pros and cons of moving to the cloud — that is, to enlisting information-technology services that you access via a Web site instead of installing software that runs on your computers. One of the crucial issues for small-business owners, as always, is cost, and though I look at cost trade-offs in the guide, I’d like to say just a bit more here specifically on the question of how expensive it is to transition to the cloud.

The answer, in a nutshell, is this: not very, usually. Most cloud-based services, be it an accounting service like QuickBooks Online or Wave Accounting, or a project-management and collaboration service like Basecamp or Mavenlink, tend to shift your costs away from potentially significant up-front purchase, set-up and customization expenses, and toward continuing monthly costs. There’s typically no initial purchase involved in the cloud, and most services are intended to be easy to adopt without having to bring in high-powered and potentially costly I.T. help.

So while the question of long-term costs is a thornier one (and one that I look at in the guide), it’s a generally safe bet that you won’t run up much of a bill getting started on the cloud. That proved true for Gordon Dalgleish, who runs PerryGolf, a 28-employee luxury golf vacation agency in Wilmington, N.C.  Mr. Dalgleish has in the past installed his own software, investing several hundred thousand dollars in building a system that helps create and price vacation packages and match them to clients. But when it came to adding a high-tech edge to his marketing efforts, Mr. Dalgleish turned to the cloud via Pardot, an online marketing automation service. He pays $1,000 a month for the service, but he’s not complaining because of the absence of up-front costs. “It probably would have taken us more than two years of hard work to build a system that does this,” he said. “It only took us a couple of days to be up and running on Pardot.”

But some jumps to the cloud are more expensive than others. Bone Daddy’s, a chain of four barbecue restaurants in and around Dallas and Austin, Tex., jumped into the cloud to improve employee collaboration. “We were using five different ways of communicating with each other, including e-mail, text, phone, shift-management software and a manager logbook,” said Mike Leatherwood, who founded and owns the chain. “And people had to be in the restaurant to sign on to one of our computers.” To get everyone on the same page, the company switched to Google Apps, and now has everyone sharing e-mail, documents and calendars from any computer or smartphone. But to get it all up and running, he shelled out $1,500 to Cloud Sherpas, an I.T. consulting company that specializes in helping companies migrate to Google Apps. Mr. Leatherwood considered the move a bargain, though, estimating he’s cut his ongoing per-user costs at least in half.

As I point out in the guide, there are still plenty of situations where business owners find that going with conventional software is a better deal in the long run. But if current trends continue, the cloud is likely to look increasingly attractive from a cost point of view — in part because competition among cloud-based vendors is fierce. “Nobody is going to get greedy on the cloud,” said Mr. Dalgleish. “There are too many options out there.”

Have you tried moving to the cloud? How has it worked for you?

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