How to scale your business with the help of cloud computing
[date-stamp]Scaling a business to meet demand, preferably more demand but also less at times, can be a challenging task. How can cloud computing help businesses with this task, and which tasks are suitable for the cloud to do? Some big companies today are surprisingly young, which means they have scaled well in a short amount of time. How can we learn from these examples and prepare a business for rapid scaling? Let's dive into the details and try to figure it out.
Scaling a business - but what is scaling?
There are many aspects of a business that need to keep pace when the business is scaling up: Ramping up and down production of what you're selling, management and administration and the sales and marketing efforts. All these things must change in order to keep pace with a change in demand. Virtual resources like web pages and web applications scale differently than physical resources like nuts and bolts needed to put together a physical product.
Scaling can be defined as the ability to change in the face of a surge or slowdown in demand for a product or service. To be rigged for scaling is crucial if the business idea of a startup really catches on, nothing is worse than having customers but not being able to sell to them, that is a waste of an opportunity.
Manufacturing - virtual or physical?
What a company is producing and selling to its customers matters for how it can be scaled. Manufacturing of a physical product like golf clubs or iPhones normally takes more effort to scale up or down than adding a new user on LinkedIn, which is a fully virtual and digital effort. So the type of what is being produced matters.
In order to be able to add a new user to LinkedIn, there must be available resources on the web servers used by LinkedIn, and the backend must be able to cope with yet another user. Available resources control this ability, so the LinkedIn web application stays responsive and fully functional for both the new user and all the other existing users. Computational resources like this can be automatically scaled up and down as needed; when there are many users using LinkedIn simultaneously, more servers can be made available to serve requests than when few users are using the service. This highlights one of the main advantages with cloud computing: dynamic allocation of resources, adapted to the current need.
Manufacturing of physical products, however, does not benefit directly from cloud computing since raw materials and subcontractors matter more than computing power. So it really depends on the nature of your business concerning whether cloud computing can have any real effect on scaling your business.
Outsourcing - the Holy Grail for scaling human resources?
How many of us have talked with someone from India when calling Dell support or similar support-services? Quite a lot, I imagine. Outsourcing standardized tasks like the support call center is a financially good way to scale, since these services can be bought. But is it a good way to scale overall? Not always, as reports of poor English skills and a lack of necessary technical knowledge is pretty common. A support call to your cable-TV vendor should lead to someone who knows a lot about cable-TV technology, but this is not always the case with outsourced support call centers. So to get outsourcing to work, some basic things need to be in place: Perfect language skills for the language the support department is meant to service, and sufficient technical knowledge to be useful for customers. If these two things are not in place, there's hardly any point in outsourcing the support function.
Note that outsourcing does not necessarily mean outsourcing out of the country. Contracting a specialized, domestic company to handle all support calls could be a better idea. They exist, and the job gets done. Unfortunately, outsourcing does not always have a good reputation, and there are some stereotypes at work. But looking past these and focusing on what matters (language skills and sufficient knowledge), it is fully possible to use outsourcing as a way to scale certain parts of a business. But it is not a good fit for all kinds of jobs, standardized tasks are best suited for outsourcing.
Management and Administration
With increased production and sales comes more activity for the management as well. More customers, more employees and in general more activity puts more pressure on the management. How to cope with this without introducing too much hierarchy and too many levels between management and the average employee? There's no general answer there, since a ton of factors are at play. But some general guidelines and best practices can be outlined.
Well-run companies are characterized by good support systems that enable the management of a company to function efficiently without having too much bureaucracy and too many people in support functions. This is at least common in the Nordic countries, and I believe this is applicable in other parts of the world as well. Such a management style requires computer systems that give enough information to function as decision support and to aid the management in taking good decisions for the company. Since management-level positions are not 8-5 positions (working in the evening and weekends is common), the computer systems must be accessible from wherever the managers are physically located. And this is where cloud systems come in, one thing that characterizes cloud applications is their availability. You want to check your sales system or files when you're in an airport? No problem with a decent cloud application.
The same thing is valid for the rest of the administration of a company, readily available, always updated applications is key to top performance and high productivity. In a well-run company, the administration must not be too large in proportion to the rest of the company, it is important to view the company administration for what it is: a support function to get the moneymaking parts of the company to function optimally. Very few companies make money from administrative functions; it is just something that must be done. So keeping this part of the company in good shape and functioning properly with a minimum of manpower is crucial. With increased customer base and general activity in a company, it is not necessary to also increase the overall size of the administration. More employees that deal with human resources may be necessary, but other functions do not necessarily need to be bigger with a bigger company. Being scalable does not always equal more employees, it is mostly about being able to put a robust system in place that can handle both spikes in activity and a sustained higher level of activity.
Cloud computing can help both in form of support systems but also as core parts of your company’s offering to the market. Picking the right cloud computing tools early on in the lifecycle of your company is crucial, as replacing inefficient tools with new ones can steal a lot of focus and energy away from your core business.