For many small businesses it still makes sense to run an in house server like Microsoft Small Business Server. But cloud services and virtualised servers are increasingly a viable alternative.

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Babbage, The Economist technology correspondent, has an interesting article about migrating from physical servers at a data centre to virtual servers. There can be management benefits:

…at 3am a couple of years ago, after two days with little sleep spent recovering a failed hard drive, I decided that I didn’t need hardware to make myself happy.

He had another 3am call recently, but is now using a virtual server.

It took a few hours of work on the hosting firm’s part—not yours truly, who woke at 3 to check on progress after a few hours of literal and server downtime. Redundant levels of hardware brought the system back to status quo ante, and I went back to bed.

I have no doubt about the direction things are heading; sometime in the next 5-10 years I expect very few small businesses will have their own servers. Virtual servers can offer maintenance and management advantages, but depending on how you calculate costs there can be significant savings too:

In this Babbage’s experiments and production deployments, an approximately $80-per-month VPS at two different hosting services performed as well as standalone hardware that would cost more than twelve times that, not including the rack rental and other incidentals. This Babbage will see his monthly fees drop by two-thirds, while his servers’ power has measurably increased. And $2,000 budgeted for yearly hardware upgrades has simply been scratched off the list.

Virtual servers are not the only cloud services, many of the famous ones offer software-as-a-service (SaaS), that is you don’t need to deal with a server at all, you just login and start working using an application that runs in a web browser. Online email services like hotmail are an example of this and have been around for ages. The latest products from companies like and productivity suites like Google Apps, Zoho and Microsoft 365 a taking it to a level where people can seriously consider cloud based alternatives.

Check back here over the next few weeks for more discussion of The Cloud and how your business can benefit.