Cloud Computing - A Silver Lining for SMEs?

24 March, 2016
By G-Team in Technology
cloud computing a silver lining for SMEs
Gpayroll has published an article in ASME Entrepreneurs' Digest Mar/Apr 2016 issue! Didn't managed to get a copy? Fret not, here is the article!

Cloud Computing - A Silver Lining for SMEs?

Cloud computing has become a hot topic in the marketplace today. While cloud technology has been around for some time, with the rapid improvements in its technological capabilities, it is gradually replacing rigid software with an all-inclusive low cost computing solution. However, implementation of the cloud technology challenges business owners to re-look and re-strategise their business processes. Today, cloud computing has all the markings of a disruptive innovation.

Why is the cloud beneficial? 

In 2015, a survey released by the Asia Cloud Computing Association (ACCA) estimates that SMEs in developed and emerging Asia Pacific will spend about $2 billion on cloud services, with a market growth rate of about 42%. Cloud computing is fast becoming a game changer especially for Small-Medium Enterprises (SMEs) with its scalability, flexibility and economies of scale. SMEs have a lot to gain from embracing cloud solutions for their businesses, giving them a level playing field required for their business to succeed amongst the larger cloud-embraced corporations.

One critical advantage that cloud computing offers to SMEs is its economies of scales. Cloud computing provides SMEs access to sophisticated technologies on a pay-per-use basis that used to be exclusively available to larger organisations with deep pockets. Its elasticity of use - the ability to scale up and down such accesses - makes it customisable to each individual business needs without the hefty price tag. Furthermore, SMEs are relieved of the burden of software maintenance or upgrades as they are typically handled by the cloud service vendor.

Another predominant advantage is the easy accessibility of cloud services. Given that only an Internet access is required, the cloud is platform-independent and can be accessed on the go via any device capable of Internet connection - mobile phones, tablets, laptops or other mobility devices. From an SME perspective - that is focused on revenue margins and achieving growth - cloud technology has the potential to be a great equalizer.

How does the cloud help businesses? Entrepreneurs Digest MarApr 2016

With cloud technology, SMEs can now streamline their core business processes and shift their focus towards business growth. Based on a cloud computing survey released by KPMG in 2014, 49% of the huge enterprises surveyed indicated that they use cloud technology to drive cost efficiencies. Additionally, 70% citied reducing costs as one of the three most successful areas of enterprise cloud implementation.

A critical pitfall that SMEs typically face is human capital management. As the business grows, it becomes increasingly difficult to manage the growing number of employees as human resources (HR) operations might still be kept separate in some traditional companies. For instance, payroll and taxes might still be manually calculated via excel spreadsheets or employees' attendances are being tracked via punchcards. Furthermore, with changes in government legislations such as the recent announcement by Singapore Ministry of Manpower (MOM) whereby all employers are required to issue itemised payslips with key employment terms to their employees, SMEs may struggle to adjust their HR operations to be in-line with the ever-changing legislations. By leveraging on cloud technology, payroll calculations and other administrative payroll operations, such as statutory tax filings and salary disbursement, are now being automated. Given the multi-functional field of human resources, putting the HR department "on the cloud" would greatly reduce the administrative work that comes synonymously with HR.

Government bodies are quickly recognising the manifold benefits of cloud technology and are strongly encouraging SMEs and even giant corporations to leverage on its potential. For instance, the Singapore Government introduced vouchers such as the Innovation & Capability Voucher (ICV) to encourage SMEs to develop their business capabilities via small-scaled projects in areas such as innovation. There is also the Productivity & Innovation Credit (PIC) Scheme that allows SMEs to enjoy tax reliefs or cash payouts for investment in productivity and innovation improvements.

Cloud technology has brought about numerous and exceptional benefits to SMEs and giant corporations today. However, are we too quick to conclude that cloud technology is bad given the negativity associated with "disruptive"? Perhaps, SMEs should start embracing the fact that every "cloud" has a silver lining.