Is cloud computing the future for business?

My kids are four-and-a-half and seven years old. They have only ever used cloud-based software! Does that make you feel old all of a sudden, because you still use software that has been installed on your computer? There is no longer any doubt in my mind that in future, software will be something we connect to rather than install and use.

Here's a quick computer/software timeline for you.

We started with software on disks which we loaded into memory and executed. That was the 1980s. We then added tape drives for additional capacity – I was doing this on a Commodore 64 in 1985. By 1986 we had PCs with a hard drive onto which we could load programs from big floppy disks. By 1995 we had software on CDs and by 2000 we had it on DVDs. Now, 10 years later, we all expect to be able to download software from the internet and use it.

So the next logical step is not even to download it. Just use it where it was built. This is kind of what cloud computing is. Of course, we're talking IT, so it is never quite that simple.

Cloud computing can mean your server is no longer in your office and runs as part of a larger system in a data centre somewhere, or it can be that you use an application such as email or an accounting app that sits 'in the cloud' – which is just a newer way of saying 'on the internet'.

Examples of this sort of technology include Google's Gmail and other office apps (such as Google Calendar and Google Docs) and if you don't want the cost savings and compromises that go with moving to Google there is also the Microsoft Telstra joint venture T-Suite which offers a host of cloud based applications including Exchange server, SharePoint and OCS the communications hub. There is also the MYOB challenger, Xero.

They're all great for micro businesses that don't want to worry about servers and backup and stuff. Then there is Salesforce.com (a client database) for CRM and other similar solutions. All of these solutions are encouraging you to use shared, cloud-based infrastructure and to move away from having your own in-house solutions.

Other products that can remove technology and related issues from your business include BizProtect, which offers cloud-based backup of your servers. It gives you totally automated backup to offsite storage by taking snapshots of your server every 30 minutes and sends the data offsite at the end of each day. Very new tech.

Then there's hosted PABX, which can save you from installing a phone system and instead gives you an elastic phone solution where you always have what you need but only pay for what you use.

This 'only pay for what you use' is a fairly common thread with cloud-based solutions. If you do not buy it and install it, you do not need to own it. The prices are set such that it is about the same price over three or four years to rent what you need and no more. This is great for businesses that are volatile or seasonal.

Don't expect big cost savings overall just yet, however, as more people get onto the new solutions we can expect costs to drop significantly. Support costs shift from maintaining infrastructure to managing connections and supporting people who need more training. Certainly in the short-term administrative costs will remain the same. Once key players emerge the administration costs will reduce as standard practices are established.

The downside is, of course, that your dependence on access to quality internet services goes from not much to 100%. When you are offline you are out of action. This is another reason we need the National Broadband Network (NBN) to be rolled out in a hurry. Of course, with a spare mobile broadband device you will be able to access you services from any location any time, even when your primary connection is down.

With cloud computing it does not matter what size your business is; there are solutions to suit any size. That said, you should not leap into contracts based on the sales pitch from the software company, because they know how to sell their solution. As I say with all IT decisions, find a trusted advisor who has your best interests at heart and listen to their advice on cloud solutions that are the right shape for your organisation.

I regularly assist businesses with 15 to 150 PCs to find the right technology. Products I am currently advising clients to take up include cloud-based email, CRM, project management, business planning, backup and PABX. I have not yet had a client take up the option of a cloud-based finance application but expect I will soon.

In my business, Combo, we currently use the following mix of cloud-based technologies to deliver our services and I must say it is all working very well. For CRM we use Salesforce.com, for backup we use BizProtect, for HR management and business planning we use Workitonline. In the next few months we will adopt a hosted PABX, as our phone system is about to be out of warranty and will then pose a significant risk to our business.

Over the next five years I expect we will see a lot of hybrid sites where there are still servers and PCs using local data and software as well as some cloud-based solutions. However, once the NBN has been put in place, there will be no reason to keep IT gear local. We will be making use of cloud-based everything and using very lightweight computers and pads to connect to whatever we need from wherever we are.

If you have not yet identified a good digital guide (IT advisor) for your business, now is probably the time to find one as the next few years will bring more complexity in IT than ever before. Once the dominant players in 'the cloud' emerge, it may settle down. Or it may be that we learn more ways to complicate our lives with a wider array of technologies.

Do keep in mind that, in 10 years time, a significant proportion of the workforce will be doing jobs that do not exist today. For example, could you have imagined in the year 2000 that there would be such as thing as a full-time job in connecting one cloud-based application to another to synchronise data? Today that is a $150,000 a year job, if you know how to do it well. Could you have imagined a job in search engine promotion? What about digital media production?

We live in a world of rapid change and the change on the horizon is definitely cloud-based. It may be time to make sure your digital guide is an experienced pilot!

Click here to read more IT Systems expert advice. David Markus is the founder of Combo - the IT services company that ensures IT is never an impediment to growth.