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Ryan Holmes has never had a server fail. Not one of his, at least. That's because his company's data is stored elsewhere, on servers operated and maintained by a third-party provider, in a place commonly referred to as the cloud.

Mr. Holmes is the chief executive officer of Vancouver-based Web developer HootSuite Media. The company's HootSuite Web app - accessible via browser or mobile phone - combines Twitter, Facebook and LinkedIn accounts into a unified, online hub. Friends and followers can be managed from a single account, making it one of the most popular social media services on the Web.

However, HootSuite is also the perfect example of how cloud computing is helping small businesses succeed in very big ways. Since its inception in late 2008, the company has harnessed the power of the Internet as a cheap but plentiful resource that allows applications, services and data to live on distant machines, available anywhere, any time.

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And for a new generation of similar online startups the cloud's advantages are seemingly endless.

"We're always synced. We're lightweight. We're successful everywhere, and don't require an IT department," said Mr. Holmes. "The benefits of the cloud, in my opinion, outweigh all the other benefits of native [local] applications."

HootSuite, for example, relies on Amazon's Elastic Compute Cloud (EC2) technology, a scalable hosting service upon which most of the company's infrastructure resides. During periods of heavy traffic, Amazon's service can dynamically increase the amount of available computing power to cope with the added stress - an impossible feat with traditional in-house hardware.

This flexibility has allowed HootSuite to grow quickly and cheaply, having gained close to 2 million users in just two-and-a-half years.

"It's about buying what you need, when you need it, if you need it," said Reuven Cohen, founder of Toronto-based cloud services provider Enomaly Inc. Similar to Amazon, the company offers infrastructure-as-a-service (IaaS) to telecommunication companies and other clients.

Without the cloud's ability to scale, a business would have to buy and maintain additional servers to meet peak demands - sometimes at a cost of thousands of dollars per machine. These days, not only is that inefficient and cost ineffective, Mr. Cohen remarked, but "it simply makes no sense to have a whole bunch of resources that sit unused 90 per cent of the time."

Machines that, traditionally, would have been dedicated entirely to invoicing software or e-commerce services, for example, can be replaced with Web applications such as Freshbooks or Shopify. These services are not only cheap but easy for IT staff to maintain.

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The cloud is far from foolproof, however. For almost four days in late April a portion of Amazon's EC2 service failed, raising the question of reliability. The outage affected such popular sites as Reddit, Quora and Foursquare, and cost HootSuite almost a full business day.

In an unrelated incident, the PlayStation network, a so-called private cloud owned and operated by Sony, was hacked in a high profile attack that same week, exposing personal information and possibly credit card data to intruders.

"An application in your own data centre isn't any safer than in a service provider's data centre," said Matt Richards, senior director of cloud strategy and solutions at CA Technologies, a New York-based IT software company. In fact, the cloud "is where a lot of people's information is stored. So it's actually a bigger, richer target."

If anything, the incidents at Amazon and Sony are good reminders that solid computing security and IT practices still very much apply online.

"Whether the computers are here or there, they're still vulnerable to security risks and downtime," said Neil McEvoy, founder and president of the Cloud Best Practices Network, a non-profit group of cloud experts. "It's not a magical technology."

HootSuite has multiple backups across other Amazon servers, which allowed the company's engineers to minimize data loss and deal with the outage more quickly than most. As for security concerns, HootSuite ensures user passwords and other credentials are never stored in its cloud, allowing the social media services it integrates to handle the authentication process on their own servers instead.

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Mr. McEvoy is using his past experience in the application service provider industry - a forerunner to cloud computing - to help businesses leverage cloud services.

A CA Technologies survey from last December, for example, showed that 62 per cent of Canadian business executives were confused by the concept of the cloud. Mr. McEvoy hopes to demystify some of the industry's jargon and terminology.

After all, it's not enough to jump on the cloud computing bandwagon based on hype and buzz alone. At HootSuite, for example, the company's rapidly growing user base necessitated more storage and computing power than a local set of servers could provide. If potential cost and performance benefits are to be realized, startups and businesses must identify similar needs and goals.

"Make a technology decision around it," Mr. Holmes cautioned. Otherwise, "you put your IT people in a position of trying to force a square peg into a round hole."

Cloud considerations

Moving software applications or data to the cloud can save your business time and money. Here are a few things to consider:

Variety: Amazon and its ilk offer infrastructure-as-a-service, often in the form of raw computing power. Other companies, including Freshbooks and Shopify, provide applications-as-a-service, which are more focused products. Know the difference, and what best suits your needs.

Privacy: Any time, anywhere availability is one of the cloud's greatest qualities, but it can also be a huge security headache. Put strategies in place to keep data safe, and use multiple levels of authentication where possible. Remember that Canadian law does not protect data stored on servers in the United States, and thus providers such as Amazon have different standards for government and law enforcement access.

Security: Cloud services will protect your data no better than the server down the hall. Implement backup and redundancy practices, just as you would with internal systems. Should disaster strike, it pays to be ready.

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