Techaisle’s latest US, Asia/Pacific, Europe and Latin America SMB and Midmarket cloud adoption trends survey research shows that the external spend on cloud will likely reach US$115B in 2019. The survey data also reveals that the total spend will be higher within small businesses (1-99 employees) than midmarket firms (100-999 employees) but average spend on cloud by midmarket firms will be approximately 30X – 35X of small businesses. Although cloud adoption is accelerating within SMBs and midmarket firms, the cloud spend is still only a fraction of the global SMB and midmarket IT spend (excluding telecom services) of US$662B in 2019.
Techaisle had forecast in 2016 that that the near-term trends will include ‘multiple clouds’ with more sophisticated automation. The 2016 data showed that over 70% of small business users and just over half of midmarket firms were working with a single type of cloud platform (public, private or hybrid). Techaisle believed that over time, most midmarket firms and a more substantial proportion of the small business community would opt to use multiple different cloud platforms, deploying workloads on the infrastructure that is best suited or most cost effective for the application’s needs. This would in turn require users to connect clouds – to each other, and to on-premise equipment – to ensure that management requirements associated with these diffused IT delivery platforms did not overwhelm the IT staff. Techaisle expected to see increased use of orchestration and advanced security technologies and other sophisticated tools to help the IT generalists who are common within SMB IT units to keep pace with increases in IT management complexity.
The forecast on the use of multiple clouds and use of orchestration and automation technologies is coming true. For example, in 2019, in the US, 52% of midmarket firms are currently using multiple clouds and 38% are using multiple public cloud providers. Even the percent of midmarket firms using hybrid clouds has increased to 45% with 18% of cloud workloads on hybrid platforms. Survey data shows that other regions, especially, Europe and Asia/Pacific, although behind the US are catching up.
Cloud has delivered undeniable benefits to organizations in how they purchase and manage their technology infrastructure and types of business outcomes achieved within their organizations. There is a lot of chatter around born-in-the-cloud businesses. Data shows that in the US, only 4% of SMBs are born-in-the-cloud businesses. A large percentage of businesses have adopted cloud for some elements of their business but simply being a user of the cloud does not make them born-in-the-cloud. Only a very small fraction of firms is creating and using a new set of business processes that sets them apart from traditional firms. Good news is that 57% of US SMBs and 60% of European SMBs are accelerating cloud adoption.
Using cloud for IT infrastructure is a given for both small, midmarket businesses and thereby across SMBs. However, there are key differences. For example, 58% of European midmarket firms use cloud for IT infrastructure, ~2X of small businesses. 2X as many midmarket firms as small businesses are using cloud for core processes and applications. 30% of European midmarket firms are using cloud in activities where internal IT is taking too long as compared to 59% of midmarket firms in Asia/Pacific and 25% in the US.
Although cloud is widespread within SMBs and midmarket firms today, further increases in usage intensity will rely on delivering not just product but strategy, planning, integration and deployment support to the mainstream midmarket and especially small business. In the past – and with traditional technology – this is a role that the channel has filled. The channel has not been a major part of cloud services vendor go-to-market (GTM) strategies to this point, but Techaisle sees support for channel members as a key factor in determining future cloud market leadership, as firms with different strengths in the market look to build ecosystems that will respond to the individual needs of SMB and midmarket customers.
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