Many cloud industry experts tout the cloud's ability to offer better performance at lower cost. As part of their argument, they frequently focus on the fact that the cloud eliminates the need to make capital investments in servers or in software. Cloud transitions also frequently allow companies to operate with leaner IT staffs, potentially saving even more money. However, those savings come at the expense of having to pay ongoing monthly costs for cloud services. Sometimes, those costs add up to more than the cost of having a traditional server and an in-house IT system.
For many small businesses, IT isn't an end. It's a tool that they use to achieve their broader business goals. In these scenarios, the cloud frequently becomes cost-prohibitive. While cloud applications enable high levels of functionality, the latest cutting-edge technology, and high levels of usability, many small businesses don't need those features.
A server that can provide adequate performance. The lack of need for advanced features means that many small businesses can measure their servers' lives in years instead of in months or quarters.
A place to run existing business applications. For many small businesses, existing applications are more than adequate for the long term.
IT support from an outside consultant. Given the high reliability of many servers and software packages, small businesses measure their IT expenditures in hours per month instead of in the number of employees they carry.
Reasonable levels of up-time. While small businesses might not want to have their servers go down, many have operated for years with a single server without redundant backups.
While the cloud competes favorably with a large-scale IT system, its cost benefits break down when compared to the server-in-the-closet approach that is common at many smaller businesses. Furthermore, those businesses are able to get many of the benefits of the cloud without actually migrating to it.
Just because a business still has a traditional server doesn't mean that it can't use the cloud. It can have work teams that set up file sharing through Dropbox, SkyDrive, or Google Drive that gives them the same security and broad access that they would get from an enterprise-grade cloud program. They can offload their email to Gmail or another web-based corporate email application. Many of them use online communications tools for video chatting or for conference calling, and they can let their employees work remotely over a cloud-based, remote desktop system.
Many of the free and low-cost cloud tools duplicate what a corporate cloud can do but with lower expenditures and less complexity. They might not be enterprise-grade by the standards of a big business, but, for a small business, they are more than adequate. Doing this lets a company maintain its legacy applications on its own low-cost server while still getting the same tools as their competition.
Over time, small businesses may gradually transition to the cloud. Instead of doing a wholesale migration, though, they are more likely to move over on an application-by-application basis. As a company's accounting system becomes obsolete, it could move to a cloud-based one. Next, it can transition its CRM (customer relationship management) function, then additional applications. This way, it gets access to cloud technology when it needs it but avoids having the significant all-at-once increase in its operating expenses.