SMBs in the Cloud

Global study shows that small to midsize businesses will
be using more cloud services over the next three years.

In many ways, cloud computing seems ideally suited to small to midsize businesses (SMBs). Smaller organizations often lack the in-house resources to maintain a complex IT infrastructure, and hesitate to tie up capital in fixed overhead. SMBs in a growth dynamic need the ability to scale IT capacity on demand to meet changing needs, and introduce new service rapidly to take advantage of new opportunities. Cloud computing fills the bill on all counts.

It’s hardly surprising, then, that SMBs plan to increase their spending on cloud computing services, including Software as a Service (SaaS) and Infrastructure as a Service (IaaS) offerings. Microsoft’s global “SMB Cloud Adoption Study 2011” investigated how cloud computing will impact SMBs in the next three years. The research found that 39 percent of SMBs expect to be paying for one or more cloud services in that time period, an increase of 34 percent. It also finds that the number of cloud services SMBs pay for will nearly double.

Those SMBs paying for cloud services will be using 3.3 services, up from fewer than two services today. The larger the business, the more likely it is to pay for cloud services. For example, 56 percent of companies with 51 to 250 employees will pay for an average of 3.7 services within three years.

Gradual Move to the Cloud

SMBs are not flocking to the major cloud providers such as Amazon, Apple or Google, however. The survey found that past experience with support from a service provider is a key driver of service provider selection among SMBs. Eighty-two percent of SMBs say buying cloud services from a provider with local presence is critical or important.

Furthermore, SMBs are taking a measured approach to cloud adoption, and seeking ways to minimize monthly service fees. Within three years, 43 percent of workloads will become paid cloud services, but 28 percent will remain on-premises and 29 percent will be free or bundled with other services.

“Cloud adoption will be gradual, and SMBs will continue to operate in a hybrid model with an increasing blend between off-premises and traditional on-premises infrastructure, for the foreseeable future,” said Marco Limena, vice president, Business Channels, Worldwide Communications Sector at Microsoft. “As cloud computing becomes more ubiquitous and SMBs’ existing IT becomes outdated, adoption will grow rapidly. Hosting service providers should consider the appropriate sales, delivery and support models to target larger SMB customers that are more likely to pay for cloud services.”

Cloud Supports Growth, Profitability

The 2011 study indicates that cloud service adoption is not limited to SMBs that see themselves as fast growers. The study showed little difference in adoption rates between SMBs that expect to grow in the next three years (42 percent) and those solely focused on profitability (40 percent).

Growth companies want a scalable environment that can meet their expanding needs, with an affordable, pay-as-you-go pricing model that eliminates the need for over-investment in IT. SMBs that want to maintain their size, but want to become more profitable, seek cost-effective, efficient solutions that match their needs for predictability and low overhead cost. Cloud services can serve both sets of criteria.

The study also found that SMBs that are adopting both SaaS and IaaS services are larger, more growth-oriented and more interested in additional services, such as unified communications and remote desktop support. This provides an opportunity for hosting service providers to offer both SaaS and IaaS in order to acquire and retain high-value customers and maximize revenue per customer.