09/22/2011 06:12 pm ET | Updated Nov 15, 2011

The Cloud and its Impact On E-commerce Businesses - Analysis

Cloud computing is one of the top subjects discussed online right now. With Apple launching "iCloud" and Google also offering similar cloud-hosted services it seems like soon we will all be working in the cloud. But what will that mean to all the online businesses out there?

Many of them already use some sort of cloud-based products. Hosting is the most obvious one, with some ventures also opting for hosted shopping carts and payment gateways. But what other areas of business could benefit from this technology?

Here are some of the main reasons why cloud computing could become huge in e-commerce:

1. Finance - At the moment it looks like it will be a lot cheaper for businesses to use cloud based services, be it software or anything else. This is mainly due to the fact that companies will not have to buy what can sometimes be very expensive hardware, not to mention the ongoing maintenance costs. Obviously the providers will need to recoup the costs of maintaining such services by incorporating them into any pricing. However, this should not make a massive difference if they have many customers across which to spread the expense.

2. Reliability - Cloud services are not as exposed to hardware failures as other types, because they can switch between many servers in case any of them is damaged or temporarily down. This means that businesses using such solutions should in theory suffer less down time and less technical problems than those working with more traditional setups.

3. Upgrades - Software updates will not be an issue for those using cloud based services. The provider will have to ensure that they are delivering the latest versions of programmes to their customers, taking a lot of hassle out of running of any business. Users will also not need to worry about having hardware capable of running certain software, as that will be taken care of by the providers of the service.

4. Security - This is especially crucial to those businesses which process online payments. By using hosted solutions from payment service providers they will not have to worry about creating secure networks within their offices, especially as these can be very costly. Instead they can entrust this task to companies which will then allow them to use their secure servers to store cardholder data. This can not only ensure better security, but again save entrepreneurs time and money too.

5. Flexibility - Cloud hosting will allow e-commerce businesses to increase their bandwidth at peak times in the year, while saving money in the quiet months. This makes not only financial sense but also helps with long-term planning. They could work on expanding their customer base without having to worry about the need to move to a larger server in the future.

The times when computers are used just as access portals that connect us to the internet may not be near, but we can probably assume that we are heading in that direction. As mentioned above there are many benefits, but many would also point out the shortcomings of such a setup. What is clear is the fact that new businesses can be helped enormously by not having to spend large amounts of money trying to do everything in house. The financial and security aspects are certainly crucial to this. The flexibility is important to all, but especially to already established ventures looking to expand. The cloud clearly is the way forward for a majority of e-commerce businesses.