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Will the Cloud Save You Money?

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Will moving your applications to the Cloud achieve cost savings? Contrary to popular belief, the answer is more complex.


By Phillip Scroggin

Phillip Scroggin is the Business Development Manager at Progressive Technology. Phillip wears several hats for the technology consulting firm, including writing copy that reflects Progressive Technology’s consulting philosophy and IT best practices.

Cloud computing is, and has been, a transformative technology model for businesses and consumers alike. The Cloud model has been gaining mass popularity for around eight years now, and the momentum has yet to wane. A recent survey by an SMB and midmarket IT market research firm projects SaaS (Software as a Service, the most popular ‘flavor’ of Cloud computing) will reach 94 percent penetration in the U.S. SMB market by year’s end. It is evident that small organizations are buying into the hype and/or benefits of the Cloud.

A Lot of Benefits, a Lot of Hype

Both the hype and benefits associated with Cloud computing are numerous. Hosting applications in the Cloud, rather than locally, provides small businesses with enhanced scalability. Most cloud service providers can offer you a platform that can scale to user count and geographical reach more easily than a locally-hosted version. In general, Cloud computing offers SMBs more mobility, flexibility, and leading-edge capabilities compared to what they could gain in purchasing a server to run the same platform from their facility.

The Cost Savings Message

Perhaps the most ballyhooed benefit of Cloud computing in the small business world is potential for cost savings. Software vendors like Microsoft, Adobe, and Quickbooks tell small businesses that running their applications locally with a server, version upgrades, patches/updates, and frequent backups is too cumbersome and costly compared to their newer, Cloud-hosted offerings.

Why spend all that man-power and capital budget on IT support and hardware when you can run your organization through a browser, using the latest-and-greatest tech, on a pure operations budget?

Pump the Brakes!

Small organizations should evaluate the Cloud for all their technology needs, but not on the assumption of guaranteed cost savings. Like many technology trends, the marketing hype of features can grow to legendary status (well beyond the actual benefits they provide). Many can remember a time when it was common belief that the desktop (and most laptops) would go the way of the Dodo bird in favor of iPads. While tablets have had a significant impact on consumers and business professionals alike, they were unable to replace a work desktop or laptop. Design limitations on input capabilities and computing power, combined with aggressive adaptations in the smartphone and laptop industries, have relegated tablets to a more niche use. In the same manner, the true potential for cost savings in going to the Cloud has been conflated with “the Cloud is always cheaper”.

The Five-Year Comparison is Best

When comparing costs between a locally-hosted application and a Cloud-hosted application, it is best to run a five-year cost projection. Doing this gives you a more accurate Total Cost of Ownership, which you can then weigh against the benefits of each deployment method. Cloud options will very frequently be the less expensive option over one to two year spans, because there is little-to-no capital investment upfront (like labor and hardware). On the other hand, cloud service subscriptions are never-ending costs, and many hardware vendors will try to compete with the low upfront cost of Cloud by offering attractive leasing options.

Buy vs Lease

Over the recommended five-year projection (the average life-cycle of a business-class server), you may be surprised to find how often on-premise is less expensive than the cloud-hosted alternative. One example that many clients run into is moving to Office 365 vs deploying a new server which hosts Microsoft Exchange. Some clients opt to deploy O365 for its mobility, operating investment, and latest-and-greatest features. Others take the long-term cost savings of on-site Exchange, and are content in foregoing some of the premium capabilities of O365. Much like buying vs leasing a vehicle, each option has its distinct costs and benefits.

A Beneficial Dilemma…for the Well-Informed

The short of it is, this dilemma is a great benefit to small organizations…so long as they take the time to evaluate all variables. As an IT consulting firm in operation for over sixteen years, we have been providing guidance to organizations since before “the Cloud” was a thing. This has enabled us to see first-hand the transformative impact of Cloud-hosted platforms on small organization productivity and growth. Knowing your options is the key…when paired with an understanding of your business needs and your current technology strengths and limitations (which can’t be discerned from a few Google searches).

When the time comes for your organization to review Microsoft Exchange vs Office 365, QuickBooks on-prem vs QuickBooks online, NAS vs Dropbox for Business, or on-site backup vs hosted disaster recovery, remember that the Cloud will offer distinct advantages…but they may come at a premium.

Smart People

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Posted: February 2012

I recently read an article titled “What I’ve Learned About Smart People” (Click here to read ) In the article, the author, a current Harvard student, makes a simple observation: smart people ask questions. Although I did not go to Harvard, I would have to agree.

The author wrote:

  • “When someone explains something new to me, I’ll usually just nod my head like I know what they’re talking about. If I don’t understand something, I’ll just Google it later. After all, I don’t want this person to think I’m a moron. Smart people are different. If they don’t understand something, or even if they think they understand something, they’ll ask questions.”

Now I must admit that I too sometimes give that same response. I think we all do at times because it is easy. Easy to nod our head. Easy to advance the conversation. Easy to assume the person speaking is both honest and intelligent in the topic they are discussing. But when it comes to running your business, you must force yourself always to ask questions.

At Progressive, too often we are approached to solve problems because decisions were made with no questions asked or in some cases the right questions were not asked. This can be prevented. We know that proper preparation and due diligence prior to starting an IT project substantially increases the opportunity for success.

In a world where transparency is the latest trigger word, we are a company that prides ourselves in transparently answering any and all questions you may have about solutions we recommend. We welcome the opportunity to assist you in the process of selecting IT vendors for industry-related software solutions, whether we have worked with those vendors previously or not. Our certifications and experience provide you with a trusted partner so that the proper questions can be asked and the answers you receive can be explained – at your level of comfort and understanding.

We invite you to call us at 682-4990 or Email Us if you need a trusted partner to assist you with asking the right questions about an upcoming IT project.

Hurricane Season Is Coming

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Posted: February 2012

Yes, we know that hurricane season is months away. Unfortunately, most businesses forget about how critical their backup solution is until the next named storm is barreling down on the coast. The time is now to review your current backup procedures, determine whether the proper solutions are in place, and to make sure part of that solution is an online backup.

Why should I backup?

Let us state the obvious: all of your data is important – whether it’s contact information, business documents, financial contracts, customer databases, or archival photographs and videos. You need to demand quality assurance that you have a disaster recovery plan in place in case of negative externalities, litigations, accidents, and other such unfortunate events.

Why use online backup?

Online backup offers an alternative to hard drive or tape backup solutions. Online backups are fully automated requiring minimal to zero user intervention. The most important advantage inherent in an online backup solution is that you will always have an off-site copy of your data.

At Progressive we offer an Enterprise Level Online Backup Solution with a rich feature set that is both secure and affordable for small and medium sized businesses.

What features are included in your online backup solution?

  • Unlimited Backup & Restoration with Scheduling
  • Unlimited Computers for Business Users
  • No Bandwidth Throttling
  • Access Files 24/7 – 365
  • Compressed Transfers
  • Customized Retention Policies
  • Full database-level backup of Microsoft Exchange
  • Full database-level backup of Microsoft SQL
  • Full Mapped Drive Support

Should an Online Solution replace my current backup?

In a corporate environment, we normally recommend that an online solution supplement your existing local backup. Although an online solution has numerous benefits, in the event of disaster a local solution may offer a quicker resolution if the quantity of data that needs to be recovered is great.

To learn more about online backups or Progressive’s online backup solution in particular, we invite you to call us at 682-4990 or Email Us.

True or False

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Posted: June 2011

True or False. Microsoft makes more money from Android than it does Windows Phone. If you answered True, you are correct. But how?

According to Microsoft, smartphones running Google’s mobile OS (Android) infringe its patents and companies who use it owe Microsoft royalties. Last year, Microsoft made their position clear to all smartphones manufacturers, including HTC.

HTC Corporation is a Taiwan-based manufacturer of smartphones. The company initially made smartphones based mostly on Microsoft’s Windows Mobile operating system (OS) software, but in 2009 it began to shift some of its core focus away from Windows Mobile devices to those based on Android OS. In April 2010 HTC decided it was in their best interest to negotiate rather than litigate, and from this came a licensing deal. This deal was not only lucrative for Microsoft, but also ironic in the fact that Android sales benefit their bottom line.

HTC has shipped roughly 30 million Android handsets, which works out to about $150 million in Android revenues for Microsoft. (Read Article)

Now if you are outraged over Microsoft’s position and actions, please note that they are not alone. Apple has also filed suits against HTC, Motorola and Samsung, alleging that their Android implementations violate Apple’s patents.

We invite you to call us at 682-4990 or Email Us with your comments on this article.

The Wallet of Tomorrow

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Posted: June 2011

“Seinfeld: The Reverse Peephole” | Episode 12 | Season 9
Watch Video

I recently thought of the above episode as I read an article this past month titled “When will smartphones replace our wallets?” (Read Article) The basic premise of the article is that smartphones may someday make wallets obsolete and unnecessary. Sounds crazy, maybe not.

With technology, a solid indicator of where the market is headed is when you have two leaders fighting for top position. As you know from reading this newsletter, if one of those leaders is named Google you should pay special attention. So when Google was recently sued by Paypal for supposedly stealing its ideas for a new service that is trying to turn smartphones into digital wallets — I took notice.
(Read Article)

In The Reverse Peephole episode, a conversation occurs between George and Jerry as follows:

  • George: “My back is killing me.”
  • Jerry: “Of course, because of that wallet! You’ve got a filing cabinet under half of your a**.”
  • George: “This is an organizer, a secretary, and a friend.”

Now, if you did not know better, you would think George was talking about today’s smart phone.

We invite you to call us at 682-4990 or Email Us with your comments on this article.

Flip No More

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Posted: April 2011

When the Flip video camera debuted in 2007, it quickly dominated the camcorder market with its low price and ease of use. From 2007 to 2009, over two million units were sold. In 2009, Cisco purchased the Flip video camera as part of its strategy to expand their reach beyond the enterprise market and sell directly to consumers.

Fast forward, to this month. Cisco Press Release:

  • As part of the company’s comprehensive plan to align its operations, Cisco today announced that it will exit aspects of its consumer businesses and realign the remaining consumer business to support four of its five key company priorities — core routing, switching and services; collaboration; architectures; and video. As part of its plan, Cisco will close down its Flip business and support current FlipShare customers and partners with a transition plan.

So, why the sudden demise of Flip? Some say, and many stated at the time of the acquisition, Cisco’s business structure could not effectively adapt to the consumer market. That probably was and is true, but I believe the more interesting factor is the explosion of the smartphone.

When Cisco purchased Flip in 2009, smartphones were limited in functionality and focused primarily on email. In the past two years, the features and functionality on smartphones have exploded including higher quality cameras and video recording capabilities. Although slow to build, there has been a shift with consumer purchasing habits and their willingness to invest more in a phone if it takes the place of other devices. Cisco saw the writing on the wall.

I would suggest that the same transformation is occurring with tablets and laptops to some degree. The consumer will look to consolidate their activity to a single device and as the design, features and functionality expand with tablets the laptop of today may be caught in the middle. Unlike The Flip, I do not think they will disappear, but it would be wise for the laptop manufacturer’s to learn a lesson from Cisco and The Flip.

We invite you to call us at 682-4990 or Email Us with your comments on this article.

The Sky Is Falling

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Posted: April 2011

Last year, Google signed an agreement to buy ITA Software, Inc., a flight information software company, for $700 million in cash. ITA’s software tool allows organizing flight information and is used by leading airlines and travel distributors worldwide. With the recent approval by The Department of Justice, websites like Kayak and Bing Travel, must have felt like the sky was falling.

Here is part of Google’s announcement

  • “How cool would it be if you could type “flights to somewhere sunny for under $500 in May” into Google and get not just a set of links but also flight times, fares and a link to sites where you can actually buy tickets quickly and easily? Well that’s exactly why we announced our intention to buy ITA Software, a Cambridge, Mass.-based company that specializes in organizing airline data last July—and we’re excited that the U.S. Department of Justice today approved our acquisition.”

As part of the approval, the DOJ said that the settlement with Google will “protect competition for airfare comparison and booking websites” and allow ITA to “power their websites to compete against any airfare website Google may introduce.”

Even in its own announcement, Google states:

  • “It’s important to us that ITA continue with business as usual, providing great service to its business partners. We indicated last July that we would honor ITA’s existing contracts. Today we’ve formally committed to let ITA’s customers extend their contracts into 2016. We’ve also agreed to let both current and new customers license ITA’s QPX software on “fair, reasonable and non-discriminatory terms” into 2016—along with related commitments aimed at making ITA’s technology available to other travel sites.”

For consumers, I believe that this acquisition will be a good thing. Kayak and Microsoft will be forced to work harder to maintain their share of the market as well as improve their product. I would imagine that improved pricing and travel packages will follow.

For web related companies, I think that an important lesson can be learned. If your company has developed a unique product or you are very successful in a niche market and people find you by searching on the web understand that Google is watching. It is likely, the more successful you become Google will either attempt to purchase you (i.e. Groupon) or they will purchase a similar product to compete with you (i.e. ITA) Remember, Google’s greatest asset is the data it culls from the millions on online searches done on its site each day. You can be sure if it happens on the web they know about it.

We invite you to call us at 682-4990 or Email Us with your comments on this article.

Read Google’s Recent Announcement

The Daily

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Posted: February 2011

“If the mountain won’t come to Muhammad, Muhammad must go to the mountain.”

On February 2nd, News Corp. Chairman Rupert Murdoch debuted the first edition of his iPad-only newspaper —The Daily. According to the press release, The Daily “gives readers everywhere the engaging experience of a magazine combined with the need-to-know content of a newspaper and the immediacy of the internet.”

The Daily features more than 100 pages of news, features, sports and puzzles each day, updates throughout the day as news demands, with 360 degree photography and HD video. It is impressive, if not for the content, then at least for its attempt to be a leader in an industry-wide evolution.

The history behind The Daily goes like this:

  • Ruport Murdoch, Chairman and CEO of News Corporation, woke up one morning in July (2010) thinking that the future of journalism would be the tablet
  • He tasked the Managing Editor of his New York Post, Jesse Angelo, to create a digital newspaper from scratch
  • He invests 30 million dollars
  • He hires 100 + employees
  • Eight (8) months later the first issue is produced

Unlike some, I believe there will always be a place for newspapers and magazines. The consolidation of some publications, and the closing of others, in my opinion is Social Darwinism at work. As the economy improves (and it will) companies will start to advertise more, which in turn will energize the print industry. But, energizing the industry and finding areas of growth are two separate things. The introduction of media specifically designed for the tablet market in my opinion is a natural evolution and can deliver this growth.

In an interview, Ruport Murdoch said, “Our target audience is the more than 50 million Americans who are expected to own tablets in the next year or so … “. Although I cannot prove with facts, I would guess most of this market does not use a phone book, they check the weather on the web, and receive the majority of their information from online resources. With the introduction of The Daily, what Murdoch is stating “If the mountain won’t come to Muhammad, Muhammad must go to the mountain.”

The Daily is subscription-based, 7-days-a-week newspaper and will cost $0.99 a week, or $39.99 a year for access. The Daily is clearly a work in progress. Will people pay? It is too early to tell. But I commend Murdoch in his attempt to lead an industry into the next generation.

We invite you to call us at 682-4990 or Email Us with your comments on this article.


Tax Relief

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Posted: February 2011

Section 179 of the US IRS tax code has recently been modified to encourage businesses to buy equipment and invest in themselves.

What is the IRS Section 179 Tax Deduction?

  • Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software which was purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income.

What are the limits?

  • There are caps to the total amount written off ($500,000 in 2011), and limits to the total amount of the equipment purchased ($2,000,000 in 2011). The deduction begins to phase out dollar-for-dollar after $2 million is spent by a given business, so this makes it a true small and medium-sized business deduction.

Which businesses qualify?

  • All businesses that purchase, finance, and/or lease less than $2 million in new or used business equipment during tax year 2011 should qualify for the Section 179 Deduction.

What goods qualify?

  • Most tangible goods, including “off-the-shelf” software, as well as business-use vehicles (restrictions apply) qualify for the Section 179 Deduction. For basic guidelines on what property is covered under the Section 179 tax code, please refer to this list of qualifying equipment. Also, to qualify for the Section 179 Deduction, the equipment and/or software purchased must be placed into service between January 1, 2011 and December 31, 2011.

As an IT solution provider, we know that investing in technology is critical to the growth of your business. And as a small business, we understand the challenges of balancing and stretching your investment dollar. Although we are NOT tax advisors, we strongly suggest that you contact a qualified tax professional to investigate if the above is applicable to your business.

We invite you to call us at 682-4990 or Email Us if you have any about this article..

  • Please consult with your qualified professional concerning your specific tax situation.


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Posted: January 2011

Quora? In 2007 people were saying, “Twitter?” Today, many people cannot remember what life was like before you could Tweet. There is a buzz in the tech community that Quora will become the next Twitter. So what is it?

Quora was founded in 2009 by Charlie Cheever and Adam D’Angelo – two former Facebook staffers. It is a new social media platform that offers a question and answer community where users ask a question to a community or person, and then wait for an answer. Think of it as if Facebook and Wikipedia had a child. Or Yahoo! Answers… only hipper.

On Quora, you can follow not only people, but topics and questions. It defines the world by your interests, not just the people you may know or admire. Its main goal of Quora is to be the best possible resource for someone who wants to know about each question. (About Quora)

You may be saying that it sounds interesting, but will it really be the next Twitter? Only time will tell, but I think it has a shot. When I first started to read about Quora I thought what a simple but ingenious idea. One of the biggest “values” for many people on the internet is the ability to conduct research and find information. One of the biggest pleasures for many people on the internet is Social media. Combine the two and you’ve got Quora. I will make sure that we keep track of this exciting site to see how it develops.

We invite you to call us at 682-4990 or Email Us if you have any questions about the latest technology trends.