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June 01, 2010

Working Smart

Get Your Head into the Clouds

by Greg Fink

Working SmartThe underpinning that enables all of this to work incorporates powerful communications networks, an array of mobile devices and ease of access to a broad range of information. A term most everyone has heard (and often misunderstood) is “cloud computing.” Simply defined, cloud computing is the ability to access software and information from anywhere in the world over a browser—a virtual computing environment allowing people freedom from their desktops.

The “cloud” is an assemblage of computers and servers accessed via the Internet that taps into your business’s applications and software. This new system’s approach is fast evolving into a commercially viable technology. In fact, Gartner Inc. predicts that by 2012, 80 percent of the Fortune 1,000 companies will pay for cloud-computing service, while 30 percent of them will invest in cloud-computing infrastructure.

If you use Facebook, you have been using cloud computing. But it’s much more than just cloud computing meets social media; it’s businesses utilizing their entire enterprise—from warehousing and distribution to business management, marketing and, of course, sales. Case in point, a recent article in BusinessWeek magazine discusses how Avon is currently involved in a multiyear makeover of the way they manage their salesforce of more than 6 million around the world. Avon equips its sales leaders with a cloud-based computing system accessible via smartphones and PCs. The goal is to increase the sales and efficiency of Avon’s distribution system. This strategy embraces a variety of computing devices, including smartphones, desktops, handhelds and laptops, giving leaders access to their business with multiple devices at the touch of a finger.

In a recent study in the third quarter of 2009, International Data Corp’s enterprise panel identified the following top five advantages companies have reported using cloud computing:

  1. Pay only for what your business uses (79.9 percent)
  2. Rapid deployment/delivery to end users (77.7 percent)
  3. Monthly payments—no upfront investment (75.3 percent)
  4. Encourages standard systems (68.5 percent)
  5. Requires less in-house IT staff and associated costs (67 percent)

While there is some perceived concern surrounding possible security risks, what many companies fail to understand is that most vendors rely on strict privacy policies (such as payment card industry [PCI] compliance for credit card protection), as well as sophisticated security measures. Most service providers address these issues within their infrastructure and support contracts. As a result, these providers typically offer greater confidentiality and data security than companies that choose to store information in-house.

“Years ago, when we were just starting our growth cycle, we recognized that our technology offerings to our independent contractor salesforce needed to be just as robust as was found in much larger companies,” says Richard Schwartz, Executive Vice President of Finance and Operations at lia sophia.

Admittedly, not all businesses are right for cloud computing, especially if users don’t have Internet access or are plagued with low bandwidth, which negatively affects access and speed. However, if you look at core direct selling behaviors, you will see a direct association between getting into the cloud and positive impact for the business and the salesforce in arenas such as:

Economical—Perhaps the greatest benefit of cloud computing is economics. Due to the recession, companies have been holding off the past two to three years on making investments in IT, as many are looking to streamline, reduce headcount and lower in-house costs. As a result, direct sellers with systems 5 to 10-plus years old are facing major challenges as companies try to catch up. Moving into the cloud means less capital and less infrastructure investment, allowing companies to focus dollars where they want—on growing revenue! Along with this come agility, scalability and flexibility—pay as you grow!

     Cloud computing equates cash flow to system benefits more appropriately. The old model of making large investments into software and hardware early in the project, before the actual development and implementation occurs, is eliminated. The risk factors associated with internal IT systems notoriously failing to deliver their promised benefits, and the big disconnects between IT and the salesforce or system users many times lead to a large percentage of projects getting mothballed as a result of budget overruns and extended project timelines. Cloud computing offers businesses the ability to catch up quickly, with reliable and scalable equipment and software, while moving IT expenses off their balance sheets.

     Other major economical benefits that cloud computing provides are shared infrastructure and costs; low-entry barrier and investment to get started, allowing businesses to avoid typical IT capital expenditures on hardware, software and services; and, ultimately, paying the provider for what is actually being used. In this way, cash flows better match system costs. This equates to more predictable cash flow, as the Finance department doesn’t have to factor equipment failures or unexpected IT expenses. Businesses run on solid, state-of-the-art equipment with the latest software, reducing the need for upfront spending. In addition, service providers get better pricing on hardware because they buy in volume.

Business ebb and flow—As businesses experience upticks, they often have to rely on securing additional hardware to accommodate that growth. On the flipside, if the business faces a downturn, the hardware inventoried is oftentimes overkill. With a high percentage of sales activity occurring in the last week of a calendar month, direct sellers’ utilization of equipment when aggregated for the month is usually a low percentage—more horsepower than what is needed to accommodate high ordering volume for only a couple of days. In addition, direct sellers are always running incentives and special promotions that may result in spikes in sales and recruiting. With cloud computing, companies realize all the capacity planning they need; businesses can shrink and grow and only use and pay for what is necessary. 

     “This minimizes the rigid and costly overhead of maintaining a much larger IT infrastructure ourselves and allows our staff the freedom to concentrate on providing excellent collaborative service to both our internal and external customers,” Schwartz says. “Today, we are seeing the continuing advantage of partnering with Next Wave, providing the flexibility we need and enhancing our ability to efficiently support our expansion into global markets.”

Internal Resources—Minimize and free up IT resources so they can focus on more company-specific, business-critical issues or projects. Your outsourced service provider should be a skilled practitioner specializing in addressing numerous IT issues typically serviced by costly in-house IT staffs. This can include hardware and infrastructure maintenance, database management, e-mail spam management working with ISPs, compliance management, operating system upgrades, high availability, bandwidth management, browser compatibility, and network infrastructure.

Increased Data Reliability—A computer crashing in the cloud will have less impact on your data, as most service providers offer redundant data management and hardware infrastructure, with hot swappable systems that are transparent to businesses. There are major benefits to relying on the cloud to always have access to data.

Group collaboration—One of the greatest benefits of cloud computing to the salesforce is being able to share and exchange information, documents, policies and procedures, and to collaborate in the field. Sponsors network with downlines, and downlines with uplines. Sales reps get instant feedback from customers on products or connect with someone considering the business opportunity, providing a forum for immediate action. The only thing the salesforce needs to collaborate is a computer with an Internet connection.

Independence—Change computers or move to a smartphone, and your applications and information are available. The cloud does not care about your network, operating system or computer model, eliminating the need to buy special software for specific devices.

Increased Quality of Service—It is the responsibility of your cloud-computing service provider to offer 24/7 support and service. This removes the burden of an internal IT group scrambling in the event of a network outage. Outages will occur, but most cloud-computing service providers have provisions that address emergency support and response in the event of power outages.

So, is this just the tech term of the day? No. Cloud computing isn’t a fad or something that can be easily replaced. In fact, it may be the largest growth opportunity since the Internet boom. Gartner is predicting that the market for cloud products and services will rapidly increase from $46.4 billion last year to more than $150 billion in 2013. Cloud computing works in conjunction with business, so it keeps up when business is good and reduces costs when business is down. Cloud computing is proving very quickly that this virtual platform is able to serve all of its masters—corporate, consultants and customers—efficiently and effectively in the now world we live in today.

Greg Fink is Vice-President at Next Wave Logistics. For more information, visit