Thinking About Moving to the Cloud? There Are Trade-Offs

WILL IT WORK? Jeff Becker, president of Kotis Design, a custom apparel company based in Seattle, had primarily used custom applications to handle tasks like inventory management, order production, invoicing, accounts receivable and customer resource management. They were all tightly integrated, and Mr. Becker said he believed that nothing in the cloud could match his applications for zipping orders through his 45-person company. But for an accounting and financial management system, he decided cloud-based services were more sophisticated and flexible than anything he was likely to build, and he selected offerings from Intacct. Even after spending four months integrating Intacct into his system, he expressed confidence that he had saved time and money: “We’re definitely in favor of moving to the cloud as we go forward.”

Still, cloud-based applications are not for everyone. Rebecca Eddy helps run a financial management service in New York that specializes in helping senior citizens live independently. Ms. Eddy relies on Intuit’s Quicken and QuickBooks to manage her finances, as well as those of her clients, and insists on buying the programs and running them on her computer rather than switching to Intuit’s online alternative to Quicken (Mint) or the online version of QuickBooks (QuickBooks Online). “A lot of daily money managers are staying away from online versions of financial software, because the online versions don’t have as many features and aren’t as flexible with reporting,” she said.

The bottom line: If you have complex or industry-specific information technology needs, you may be better off with packaged or custom-designed software.

IS THE MONTHLY FEE A DEAL? In 2005, Roper DeGarmo, who founded and runs Signature Personal Insurance in Kansas City, Kan., first ran his four-person agency with a conventional software package made for insurance agencies, but he was disappointed at what he got for the price. “They charged us $6,000 up front and a steep per-user fee on top of that,” he said. “It just didn’t make sense for us.” He ended up going with Salesforce.com’s online customer resource management service, which like most cloud-based services, has no set-up fee. Now he pays $1,500 a month for the service, and he says it does everything the agency needs for marketing to and servicing clients.

He also signed up with Google Apps for e-mail and Dropbox for file sharing, each of which costs only a few dollars per user per month. He uses QuickBooks Online for about $50 a month and even moved his phone service to the cloud via Ring Central at a cost of $100 a month for four lines — less than his monthly iPhone bill, he said. “Those applications are my company in a nutshell,” he said. “I like to tell people I own an agency but I’ve never owned a file cabinet.”

But for Helen Zagaro, whose five-person company, Star Promoz, in Brightwaters, N.Y., sells business promotion products, buying software outright seems a better deal. “I don’t want the month-to-month expense,” Ms. Zagaro said. “I bought QuickBooks for $600, and I have it forever.”

The bottom line: Functionality is paramount, but all else being equal, choose the cloud if you prefer to avoid large short-term expenses.

WILL YOU ALWAYS GET ACCESS? For Sonya Weisshappel, founder of a 12-employee, home- and business-organizing company, Seriatim, in New York, the move to the cloud followed the decision last year to move her offices. “We were going to be between physical spaces for days,” Ms. Weisshappel said, “and I wanted everything to be accessible to everyone.”

Until then, her computers had been running a $20,000 custom-designed database application for overseeing every step of the marketing and organizing processes, but she switched everything to Intuit’s online QuickBase database service at a cost of $200 a month. “There were a few small hiccups that were easy to fix,” she said, “and now QuickBase does even more than we could do before.”

Ms. Weisshappel is designing her own home inventory system, and she has already decided that she will find a cloud-based inventory application on which to run it. She says she expects to provide better access and help her clients avoid losing their inventory when they most need it — namely, when a flood or fire destroys their computers and the files on them.

The potential downside is that you can become dependent on the reliability of your Internet connection. Mr. DeGarmo, of Signature, for example, had to add a DSL connection to a cable connection, and he still occasionally has dropped calls with his cloud-based phone service. What is more, even the most reliable cloud services fail on occasion. Amazon single-handedly brought down a chunk of the Web in April, and again more recently, when its servers, which many cloud services rely on, went down. And, unlike when your own computer goes down, there is nothing you can do.

The bottom line: The cloud is ideal if you and your employees need access to tools and data from different computers and devices. The cloud can be a problem, though, if you do not always have fast, reliable Internet access, especially if you upload or download large files.

WILL YOU GET SUPPORT? Compared with most packaged or custom-built software, cloud-based services do not always make it easy to get someone on the telephone or by e-mail, and they do not provide thick user manuals. Instead, these services sometimes force customers to rely on FAQ pages and online community support, which can be spotty.

Ms. Zagaro of Star Promoz said she would much rather rely on her I.T. consultant to fix problems or to tweak her system. “We had a computer freeze here, and our guy came in and fixed it right away like nothing happened,” she said. “If I had been using QuickBooks Online and it went down, I’d have freaked.”

But Mr. Becker, whose apparel company uses Intacct’s financial management service, cites support advantages to dealing with a cloud service. “Intacct keeps coming out with new features,” he said. “And we’re constantly getting free upgrades that work with new browsers and operating systems.”

The bottom line: If you need handholding or if you are not comfortable trying to find advice on user forums, the cloud probably is not ideal.

IS YOUR DATA SAFE? “A lot of my older clients don’t want any of their data in the cloud,” said Ms. Eddy, the financial manager. “They’re very nervous about it.” Mike Leatherwood, founder and owner of Bone Daddy’s, a chain of four barbecue restaurants in and around Dallas and in Austin, Tex., is an enthusiastic user of Google Apps, but he agrees that confidential data should be kept out of the cloud. “We keep financial and H.R. data on our servers here,” he said.

But several of the owners I spoke with felt satisfied that their cloud providers were doing at least as good a job as the owners themselves could in keeping data safe.

The bottom line: If you do not like the idea of trusting anyone but yourself to keep your data safe, the cloud may take you out of your comfort zone.