It is getting harder to shout over the noise surrounding cloud computing. Is the wide-spread excitement justified? If you are a small business, why should you care?

If you are a businessperson — not a technologist — and you are only going to remember one thing about cloud computing, here it is: Cloud computing promises to finally take IT out of the balance sheet and put it squarely into the income statement. How? By turning all business technology into pay-as-you-go services provided remotely, all the tech spending in your increasingly technology-dependent business becomes an operating expense — resulting in big savings, reduction of daily headaches, mitigating risks, and simplifying your life in a way that few business ideas ever have.

Before we go further with this key insight, let’s define cloud computing so the uninitiated can join the euphoria. For practical purposes, cloud computing generally refers to any business service or application that doesn’t physically reside at your site but instead resides in a data center somewhere on the Internet (the “cloud”) — and is accessed remotely. So if your email server, phone switch, CRM system, business applications, file server, etc. refer to hardware and software that live in a closet down the hall today, cloud computing promises to get it all out of your hair tomorrow, park it in a fancy temperature-controlled data center with dual fire suppression, and only charge you a subscription or pay-per-use type monthly fee.

Bringing it down to earth even further — when someone says “email” today, what image does that conjure up for you? You may think of Microsoft Outlook on your traditional laptop or workstation sitting on your desk, your Exchange server in the computer room next door, living in a physical machine that you bought, complete with a slew of software licenses, your third party spam filter and email security provider, and your IT managed services provider who runs the whole thing for you. Tomorrow, all this gear at your office will be gone. You will be sitting at a (very) flat monitor with nothing else in sight. A “desktop” that has no moving parts, is smaller than your hand and hardly uses any power will be permanently stuck in the back of said monitor. The “email” itself will become a pure service that you buy over the Internet, per user, per month, with menu-based features you can turn on or off — much like your cell phone plan.

So here’s the revelation part: technology stops being “boxes and wires” to you, and becomes a utility service — a business function served remotely to wherever you are.

Going back to CPA-speak, cloud computing means no balance sheet items and no payroll — you don’t own anything, therefore you don’t capitalize, amortize or depreciate anything, and you don’t have in-house employees or contractors to run anything. You just buy business services that are provided over the Internet and pay a monthly fee for them — a straight operating expense. You buy the business function, not the technology behind it. Everything is run, secured and updated for you in a managed services model, and best of all, you never have to know how it all works. We know you never wanted to.

While significant roadblocks remain in the way of wholesale adoption of cloud computing by small businesses, the elevator pitch remains very powerful – technology distilled into a pure business service, with immediate time to market, no upfront investment, no staff, and no overhead. Buy only what you need, lower your operating costs, and grow incrementally. So start looking into it, think about what pain points you have today, then make sure you get the best technology advisor you can find to help you navigate a phased transition to cloud computing. And go ahead and take the credit when your CPA congratulates you.

Copyright (c) 2009 by Marcus R. Lincoln. All Rights Reserved.