A few weeks ago I wrote about, “SMBs: What to do about cloud computing?” In the piece I suggested the time might be right for SMBs to seriously consider making the move to the cloud, but not without doing their homework first. I specifically suggested, as a first step, that companies define why the cloud makes sense(or not) for their business based on their unique needs. As we all know, each business is different and the cloud is not a cure-all panacea for all businesses.

So, you may ask, “Why is Cloud right for my business?” and while it might seem obvious, it’s well worth exploring why and how the cloud makes sense for you. Don’t take it for granted, think it through.

Define What Success Means

At the most basic level, the decision to move your applications to the cloud should be based upon one simple metric it should improve your business. Why else would you take the time and effort to explore new cloud solutions, evaluate multiple vendors and develop a business case? If moving to the cloud does not at some fundamental level make your business more successful then it’s probably not worth the effort. Ensure you’re investing your money and staff resources wisely - it’s a simple investment analysis at the core.

So how do you know if the cloud will make you more successful? First, it’s important to define success. Though success can be framed in many ways, here are a few that will point you in the right direction:

1) Acquiring more customers and generating incremental revenue

2) Reducing costs and improving the bottom line

3) Gaining a competitive advantage to achieve a level of scale and efficiency that improves profitability

However you think about success for your business given where you are now, you need to be clear on what success metric will be the tipping point in deciding if cloud computing makes sense for you.

Determine If Success is Achievable

Once you establish your definition of success, just how do you go about deciding if you have a shot at achieving it with cloud computing? While you could simply call up a number of vendors and ask them their view based on proven success with their own solutions, there are a few simple ways to determine if the cloud makes sense before you even pick up that telephone. . Doing your due diligence before reaching out to them will better prepare you and ensure your questions are well informed.

Here are a few steps you can take to help you determine if the cloud will make your business more successful:

1) What business functions needs the most help?

Often companies know that specific functions suffer from poor business processes. Look for areas where there are lots of manual steps to complete tasks that could be streamlined through automation. Think through areas where you wish you have better visibility into performance but your existing systems don’t capture the data nor present it in a meaningful way. Most often companies find ways to improve customer facing functions such as sales, marketing or customer service. Not surprisingly, CRM has been the most widely adopted cloud application thus far.

2) Are your competitors moving to the cloud?

We live in a competitive world and you can learn a lot from your competition. If you want to gain a competitive advantage or maintain the advantage you have today, try to find out how your competitors are leveraging the cloud. If your competitors are using cloud computing, odds are you should be too. If they are not, you should consider if moving to the cloud will give you a leg up.

3) Will your customers, employees or vendors benefit from the cloud?

If your success metrics are similar to the ones outlined above, then ask yourself who will benefit most from moving to the cloud. If your sales organization will be more efficient in managing customers, you may be able to generate incremental revenue from a cloud CRM application. If your accounting department will be more efficient in processing orders, generating invoices or collecting cash, then maybe you can reduce costs using a cloud financial accounting application. If your vendors will be more effective in delivering products or services on time and on spec, maybe you can gain a competitive advantage and generate more revenue and reduce costs as well.

Exploring these areas and mapping them to your success criteria will help you determine if cloud computing is right for your business and why. With this assessment in hand, you are well prepared to take the next step on your cloud. For the cloud veterans out there, how have you defined cloud success? Stay tuned to this space… in a couple weeks we’ll explore the differences between cloud and on-premise computing.