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Could your start-up live on the cloud?

Thursday, 13 January 2011 | By Mahesh Sharma

Technology is often touted as a great leveller of industries. Something that enables small businesses to compete at the same level as the big boys.

 

Cloud computing (applications accessed over the web), the National Broadband Network or internet-enabled phones like the iPhone or Android have been heralded as the architects in the changing way we live and do business.

 

However, it’s not the first time we’ve heard this spin. Anyone remember the dotcom boom? The web 2.0 revolution has brought a range of sophisticated functions within reach of anyone with an internet connection, but the hype needs to be taken with a pinch of salt.

 

Cloud computing and other technology can be a huge benefit for start-ups, but each business needs to ask itself and others a series of questions before investing its (often limited) funds.

 

Has the technology matured to a point where it can be easily acquired and set up? Can this be done without spending huge amounts of money on licenses, infrastructure and manpower to run it? By using these new technologies, does it help businesses better web-delivered services?

 

Accounting software

 

It's no secret that businesses live-and-die by the way they manage money. Larger companies spend huge sums of cash on financial systems managed by teams that slice-and-dice accounts and data and use this information to make strategic business decisions.

 

This service is now within reach of small business, via new web-delivered applications such as Xero, which can be accessed from anywhere. It integrates back accounts, publishes reports and allows the data to be used across different software, such as customer relationship management (CRM) products.

 

Software such as MYOB and Quicken used to do this in the past, but there were often complaints that it was too difficult to use for anything more than doing tax.

 

Melbourne-based sports photography business, Blinq Photography uses Xero to manage its financials. Founder Shawn Smith says it took him about 10 minutes to set up the application, which involves inputting corporation details and coordinating the feed from the company's bank account.

 

The software has transformed the relationship with his accountant, as all the company’s financial information is stored in one place, which could be accessed from anywhere.

 

Previously, the interactions were difficult, as data was traded back-and-forth until they got the right version.

 

With Xero, both parties are looking at the same set of data, so the conversation is more focused on future planning for the business, he says.

 

“The communication was so drawn out, you couldn't make quick decisions,” he says. “Now when I call the accountant, he logs in to the account, says 'great, do this, do that, change this', and the meeting's done.”

 

“There’s more meaningful conversations, talk about outlooks on the business rather than pay... and as a small business owner, that conversation generally doesn't happen until you have a very good accountant or push it to that way.”

 

Prices for Xero range from $29 per month for freelancers and individuals to $64 per month for larger businesses.

 

Xero Australia country manager Wayne Schmidt says the application is aimed at companies with up to 19 staff, and allows them to better manage and analyse their financial data.

 

“It provides better management reporting, ie. what products are selling, what is not, which clients am I making money out of, “ he says.

“It gives much better visibility because you can attach it to bank data, it's always live, and because it's in the cloud, you can invite your accountant in to look at it.”

 

Web hosting, file backup and online storage

 

With the internet increasingly becoming the de facto way for businesses to market services, sell products and manage their affairs, it's easy to forget that all this data needs to be stored somewhere.

 

In the past, managing your affairs online required a significant spend on IT infrastructure, the physical space to host this and a technician to navigate the maze of hard drives, servers and cables.

 

This has been simplified by cloud hosting services, such as Rackspace.

 

One Rackspace customer is MediaConnect, which offers cloud computing services to PR companies, and can scale its storage needs, according to MediaConnect CEO Phil Sim.

 

“It makes it very simple,” he says. “In the past you probably had to administer your own server, but cloud based hosting services like Rackspace take care of a lot of that administration for you.”

 

Other important storage tools include Backblaze, which costs $5 per month and allows unlimited backups of files.

 

A further useful file-sharing technology is Dropbox, which allows any file to be automatically synced across a range of computers. Just download the free program and install it across the range of computers that need access to the files.

 

Outsourcing services

 

Outsourcing services to low-cost countries has allowed big businesses to save significant spend on particular services, including technology development and call centres.

These services are now within reach of small businesses, via sites like freelancer.com, odesk and elance. Types of talent available include programmers, designers, writers, marketers and a range of consultants.

 

Businesses simply sign up for an account, post a job, and wait for a freelancer or contractor to respond. For businesses there is a $10 account set-up fee on elance.

 

Eco-system

 

Beyond individual applications, the real advantage lies in the “eco-systems” that have grown online.

 

Gone are the days when proprietary software applications wouldn’t interact with each other, unless you had team of tech specialists.

 

For example, once accounts have been set up in Xero, the financial data can be further exploited by leveraging a range of applications such as customer relationship management (CRM), inventory, invoicing, payroll and even digitising old receipts and business cards.

 

Connecting a central point like financials with other operational functions, businesses can start to create a true technology-driven workflow.

 

One Xero partner is payroll application Paycycle, and co-founder Stuart McLeod said this kind of workflow was only available by spending millions of dollars paying IT staff and buying enterprise resource planning systems, which took years to implement.

 

“Because of the efficiencies and integrations built into the various apps you need, the vendors have done that for you, that saves you time and manual intervention in all your business process,” he says.

 

“So business owners can get out there much more than they used to just sell, focus on customers, and supplier relationships.”

 

Eating your own dog food

 

For cloud software providers such as MediaConnect and PayCycle, using web-based services is not just about accessing cheap technology but also about understanding what works and what doesn't and using this knowledge to deliver better web-services to their customers.

 

“We obviously provide a cloud PR solution, so that people can do PR more cheaply, and effectively we offer a solution in that market as well,” MediaConnect's Sim says.

 

“We have always felt we needed to eat our own dog food, we have been using only cloud based software for probably seven to eight years now.”

 

This sentiment was echoed by PayCycle's McLeod, who says that he is starting to see more and more non-tech customers use the company's web-based payroll application.

 

“I guess very slowly, we're starting to move up the curve a little and into a more mainstream market,” Mr McLeod said.

 

“I've also noticed there's all kinds - bakeries, hairdressers, plumbers, bus companies, recruitment agencies.”

 

Useful technology

 

Xero: Accounting software. Stores all your financial information in one location, which can be accessed from anywhere and by anyone.

 

Rackspace : Web hosting. The infrastructure required to provide full website hosting. Requirements can be scaled up or down to accommodate fluctuations in traffic and demand.

 

Dropbox: File sharing. Free tool which seamlessly syncs files across a range of PCs. Once installed, files can be easily uploaded/downloaded by copying them to the Dropbox folder.

 

Outsourcing services

 

Freelancer.com, odesk, elance. Places for small businesses to access pools of talent that specialise in a whole range of jobs or projects. You pay by the hour.