If you are a seasoned or brilliant investor, you can use your funds to directly make stock purchases, confident in your experience and know-how. But, most of us are not Warren Buffet, which is why many of us invest in things like mutual funds instead. According to Investopedia, a mutual fund is “an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors.”
In plain terms, a money manager uses mutual funds to combine resources with other people who wish to invest, resulting in some big benefits over making those investments singlehandedly.
This strategy bears more than a passing resemblance to leveraging Cloud services like SaaS, PaaS, and IaaS solutions. Cloud platforms allow a business to pool computing and application resources with other customers within a Cloud provider’s platform, allowing for greater power and flexibility than if that business were to purchase its own hardware, applications and management and technical staff.
Two key advantages
There are two key advantages to cloud services that parallel the advantages of investing with a group, such as via a mutual fund:
Pooling resources reduces overall cost
From Investopedia again: “Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Imagine if you had to buy the 10-20 stocks needed for diversification.”
Similarly, when a small to midsize business hosts some or all of its IT infrastructure in the Cloud, they are able to share a much more powerful platform than they could possibly afford on their own. Cloud platforms like Microsoft’s Azure or VMWare’s vCloud Air leverage incredibly dense layers of processing power, storage, security and fault tolerance. What does this mean for the small to midsize business owner? It gives you the ability to compete with much larger competitors. For example, you can process gigabytes more of your customers’ data in far less time in the Cloud than you could on on-premise equipment. And, you can scale those needs up or down, which means you’re only paying for what you need.
In the case of SaaS offerings like Microsoft Office 365, Google Apps, or Salesforce, you are eliminating the need for on-premise software, maintenance fees, and hefty upgrade costs. SaaS applications are constantly upgraded and protected by their host companies, so there is less on your To-Do list when it comes to your IT infrastructure.
Professional expertise a la carte
“When you buy a mutual fund, you are also choosing a professional money manager. This manager will use the money that you invest to buy and sell stocks that he or she has carefully researched. Therefore, rather than having to thoroughly research every investment before you decide to buy or sell, you have a mutual fund’s money manager to handle it for you.” – Investopedia
There is another parallel to illustrate here with Cloud services, and especially those that are supported via a cloud services broker. IT industry professionals, and especially those well-versed in Cloud services, have extensive experience in what works and what does not, and can help the small to midsize business owner spend her money much more wisely. There may be some IT services that would be more cost-effective to stay on-premise, for example. Others, such as hosted email or backup and disaster recovery, make a lot more sense to put in the Cloud. A cloud services broker, much like a financial manager, can navigate a clearer path through all the many options and confusion inherent in today’s Cloud services landscape. Most business owners and managers, even very technically savvy ones, cannot devote the time and effort that a full-time IT expert with Cloud solutions experience can.
Like the financial manager and mutual funds, the IT consultant and Cloud services can be a wise choice for the client whose budgets are modest, but whose desire for success is the same as anyone else. We all want to succeed and invest our money in the most effective way possible. Outsourcing the expertise and pooling the resources is a wise move, both in the world of finance and the word of information technology.