The Information Technology Lab at the National Institute of Standards and Technology characterizes cloud computing as "a pay-per-use model for enabling available, convenient, on-demand network access to a shared pool of configurable computing resources (e.g. networks, servers, storage, applications, services) that can be rapidly provisioned and released with minimal management effort or service provider interaction." In plain English, here's what that means: Companies can use cloud computing to leverage external technology applications and tools that improve back-office functionality and make client-related processes more robust. What's more, companies only have to purchase the amount of functionality necessary to meet their immediate needs, and they can scale up quickly and precisely whenever their business conditions change.

Service providers can help midmarket firms make the transition to cloud computing

Interestingly, while use of the cloud among businesses is far from universal right now, it is likely more widespread than many executives think. For instance, a company that uses any kind of software as a service (SaaS) is, in fact, using the cloud. But going a step further, more companies are also looking to leverage infrastructure as a service (IaaS), which helps midsized firms match the internal IT infrastructure of larger competitors.

Using the Cloud to Level the Playing Field

Maximizing the features available in the cloud can be beneficial to back-office processes. For example, the cloud provides nearly immediate access to hardware resources with no upfront capital expenditures. This not only decreases the time to market, but also converts the tech expense from capital to operational, thus providing budget flexibility that is critical to midsized firms. Because cloud services are "pay per use," even mundane tasks such as document management and backup services can be smartly budgeted for, with no need to purchase future capacity before it's necessary. Use of cloud services also frees up internal IT personnel to focus more on day-to-day organizational support. They will spend less time troubleshooting internal assets and forecasting additional asset purchases based on estimated future needs, which, of course, could turn out to be inaccurate.

Further, cloud services deliver competitive advantages. For example, the ability to purchase highly robust data-analytics tools becomes possible for midsized firms. The cloud also makes possible new types of tools, such as interactive mobile apps that are location- and context-aware and which respond in real time to user input. Other dynamic elements, such as digital marketing and research and development, are boosted by the lower cost of entry and customizable functionality that cloud services provide. As success builds within a firm, each cloud service is scalable to a precise degree. All this helps to improve the competitiveness of midsized firms versus larger organizations in their marketplace. Another advantage that midsized firms have over big companies is that their internal structures, which are generally smaller with fewer silos and less overall complexity, make it simpler to integrate cloud services into present operations.

Addressing Information Security in the Cloud

On the flip side, security of information is the most high-profile point of concern when it comes to businesses using cloud computing. In addition to the other considerations middle market executives must make during cloud service cost-benefit analysis, they must carefully consider the maximum potential damage that would come from a data breach. Many of these are, in actuality, initiated by employees, vendors or clients rather than outside actors. With that said, SaaS and IaaS providers are constantly advancing their own security protocols, and also work closely with third-party security vendors that client firms can enlist when purchasing cloud services. Another potential drawback: temporary loss of internet connectivity that leaves the firm unable to access its data. Firms should establish backup systems so that cloud services can still be accessed until the primary internet connection is restored. Conducting due diligence in these two areas is an essential part of the decision-making process for midmarket executives as they assess their firms' potential use of cloud computing.

Has your company shifted to the cloud yet? If so, what was the biggest driving factor for the transition? If not, what is your biggest concern? Tell us by commenting below.

Rob Carey is an NCMM contributor and a features writer who has focused on the business-to-business niche since 1992. He spent his first 15 years at Nielsen Business Media, rising from editorial intern to editorial director. Since then, he has been the principal of New York-based Meetings & Hospitality Insight, working with large hospitality brands in addition to various media outlets. Circle him on Google+.