If you still can’t wrap your brain around "the cloud" and what it can do for your business, just think of it as a Web-based form of outsourcing. For a small business that doesn't have the resources to manage repetitive business processes and technology in-house, cloud computing can be a valuable time- and money-saver.Arzeda, a four-person Seattle biotech firm, needed more data processing power for product development — but this would've required an investment of $250,000 in new technology to plan for peak capacity. Instead, the company signed up for a Microsoft cloud service, Windows Azure, which gives it the computing power it needs for a lot less (read case study).“We pay only for what we use,” says Alexandre Zanghellini, co-founder of Arzeda. “We’re spending only 13 percent of what would have been our capital expense for an on-premises solution, and have made it just an operational expense."How it worksCloud service providers charge fees to remotely host and manage their customers’ applications, infrastructure or data. Workers can access the data and applications from any device with an Internet connection, using a login and password.Cloud services are so affordable because the provider can spread costs among many customers, making it a shared resource rather than a dedicated one. Customers benefit by paying only for what they use, and gain the flexibility to scale up or down as needs change. In addition, companies don't have to purchase software licenses or manage any technology themselves.There are many ways a small company can use the cloud to offload time-intensive and costly tasks: Cloud providers can handle storage, administer backups and security, host business software or manage virtually any process that can be computerized.
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Jeremy Pyles — CEO and founder of Niche Modern, a Beacon, New York, maker of glass-blown pendant lights and chandeliers — used to spend anywhere from 20 to 30 hours a week on bookkeeping activities. Since he began using an online billing service called Bill.com in 2008, he's spending only two or three hours weekly.This is despite the fact that the company, originally a retail business in Manhattan, switched gears when he and his wife launched a design and manufacturing business in 2005. In every year except 2009, the six-person company has doubled its sales. "It's been very exciting, but also tricky because we are manufacturing the products ourselves and we don't have much of an infrastructure," Pyles says. "That put a lot of stress on me and my wife."Why the cloud?Pyles decided he needed a solution that would allow him to focus more on business strategy and marketing, and less on document management. His first step was to use a paperless check service offered by his bank, Bank of America. But he couldn't integrate the electronic checks with his company's accounting system, Intuit QuickBooks, and there was no workflow for approvals.After doing more research online, he settled on Bill.com, which met his requirements for workflow and syncing with QuickBooks, and would be easy for anyone in his company to use. The service costs $50 per month, which is a bargain compared to hiring a bookkeeper at $40 an hour, he says.Now, Niche Modern’s vendors (including the company's full-time contractors) e-mail invoices to Bill.com, where they are processed and stored. Within minutes, Bill.com e-mails the invoices to Pyles’ assistant, who routes them to managers for approval. Every day, Pyles logs on to Bill.com for a few minutes to view and approve bills and schedule payments in advance."I still get to be involved in the last step of workflow, which is the peace-of-mind component," he says. Pyles’ assistant can also scan and fax paper invoices and send them to the Bill.com e-mail address. Within 15 days, vendors get paid.There are other benefits, too: Bill.com provides a cash flow forecast based on Niche Modern’s billing and invoicing records, which Pyles says is invaluable for business planning. Finally, with QuickBooks integration, Niche Modem has an internal backup of all billing documentation, in addition to storage at Bill.com. Pyles says he's considering using Bill.com for customer invoicing as well.It can take a leap of faith to put part of your business in the cloud. Strong security and backup processes are mandatory, and you'll need to consider the provider’s track record and history. But consider what the extra time can do for you.It gave Pyles the ability to focus on renegotiating business contracts, including insurance, which has saved his company thousands of dollars per year. Being more efficient has even played a role in helping the company grow and hire three new employees in the last year. “[Now] we want a new hire to do things that only humans can do, not what computers can do," says Pyles.Polly S. Traylor is a former high-tech magazine journalist with CIO and The Industry Standard, among others. She writes about business, health care and technology from Golden, Colorado.