A Lesson in Crash

Online business applications have been nothing short of a revolution for small businesses in the last decade.

But they come with a downside, and this week demonstrated that as some of the most popular small-business applications available on the Web disappeared suddenly. On Tuesday, Intuit’s online versions of TurboTax, QuickBooks, Quicken, and QuickBase crashed. They were just restored Thursday.

But for two days, small businesses were without these key resources. And there are a lot of small businesses, about 300,000, that rely on Intuit’s online services.

“I deeply apologize for the pain we have caused those of you affected by this week’s outage. We hold ourselves to the highest standards in dependability and customer service, and over the past two days, we have failed to live up to those expectations,” Intuit CEO Brad Smith wrote on the company’s blog. “I want to thank you for your business and your patience. We will work our hardest to earn back your trust.”

It should come as a cautionary tale to small businesses, which have grown increasingly reliant on tapping into the so-called “cloud” for software and computing power.

That cloud has been a fantastic thing for many small businesses, cutting the costs associated with buying and maintaining such equipment as servers and buying new software upgrades every few years.

Christine Mason McCaull of Clickmarkets and Wide Angle Metrics, who is participating in a yearlong Portfolio.com series on entrepreneurs and the global economy, The Great Global Business Adventure, wrote that cloud computing had been a huge boon to her and her business partner, Chip Roberson, when they started their company.

“It took a lot less money and time to get to that first dollar in sales revenue, thanks to technologies that have vastly reduced selling, marketing, and administrative costs in setting up a new venture. This has freed us up to invest our money and time in the development of what is core to our business, run very lean, and bootstrap our company through sales revenue, not Other People’s Money,” McCaull wrote. “What cost a minimum of $500,000 and took nine months and lots of engineering talent in 2004 can be done today, thanks to technology changes, by smart people with some Web awareness or the willingness to learn, for less than $20,000 in three months.”

That’s some powerful testimony about the power of the kinds of services available now to small businesses that just didn’t exist a few years ago. But small-business owners should also be aware, as the Intuit case shows, that for those savings and opportunities, they give up control of their equipment.

As for Intuit, it was just a simple power failure that caused the outage that spread pain to thousands of small businesses.

“We understand your frustration and are sorry it took so long. We understand the important role our services play in your business and life. And we take that responsibility very seriously,” Smith wrote.

Amen to that for Intuit, and for the dozens of other services that have sprung up online to provide services to small businesses. And the lesson for small-business owners? Know that even the greatest services come with danger.

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Kent Bernhard Jr. is News Editor of Portfolio.com