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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Cloud is the Center-Point of IT operations for 15 percent of SMBs using Cloud

Techaisle’s SMB Cloud Computing Adoption Trend research (US, Canada, Germany available now; upcoming Australia, China India, Brazil, Mexico) shows that cloud computing has moved beyond a niche approach to IT, and is now the center-point of IT operations for 15 percent of US SMBs that are currently using cloud, and for 25 percent of US mid-market (100-999 employees) businesses that are using one or more cloud-based system. However, SMBs in other countries do not yet exhibit the same acceptance of cloud’s role within their IT operations. For example, in Germany, only 6 percent of SMBs consider cloud to be the center-point of IT operations – but a whopping 56 percent use Cloud to supplement traditional IT resources.

techaisle-smb-role-of-cloud-computing-study

Drilling down into the data gives a fascinating perspective of profile differences across businesses that view cloud either as center-point of their IT strategies or supplemental to strategies rooted in conventional on-premise technologies. The data also exposes the fact that businesses are still struggling to really define how best to use Cloud.

Within the small business (1-99 employees) segment, we find that small firms using cloud are most likely to add cloud into a physical device-based IT approach: the average small business reporting that cloud is used to supplement traditional IT resources has 10 employees and only one location. Small businesses that have achieved higher growth levels are more likely to position cloud as the center-point of an agile IT infrastructure; these companies are about two times larger (17 employees, two locations) than the “cloud is a supplement to traditional IT” small business average.

In mid-sized businesses that are currently using at least one cloud-based system, this trend is reversed. Mid-market businesses that position cloud as the center-point of IT operations average 227 employees working from four locations. The averages increase to 321 employees and six locations for mid-market businesses that use cloud as a supplement to traditional IT resources. However, the trend of averages is just the reverse for small businesses.

When this data is analyzed along with the use of public, private and hybrid Clouds and the planned changes in Cloud workloads it shows that there is no one strategy for all sizes – though we see growth in hybrid in all segments, the paths that different kinds of operations are taking to hybrid vary by size and by other factors

More detailed data is available in Techaisle’s report titled SMB Cloud Computing Adoption Trend which covers:

  • Benefits & Inhibitors of Cloud Adoption: Why is Cloud Being Used? Why Not Cloud?
    • Drilling down into small business and mid-market perceptions of Cloud benefit
    • The intramural divide: ITDM vs. BDM perceptions
    • Inhibitors: Why not use Cloud?
    • ITDM and BDM inhibitors
  • IT or Business: Who is driving SMB Cloud adoption?
  • Private, Public or Hybrid: What is in use and planned to be used?
    • Adoption of hybrid
    • Aligning Cloud delivery with requirements
  • Current & Planned Cloud Applications: Where is Cloud being deployed?
    • Understanding the gateway to new platform and/or business specific capabilities
    • Key Cloud applications and workloads by employee size
    • Vertical workloads becoming ubiquitous; Role of content publishing, CRM
    • Differences in small business and mid-market SaaS adoption patterns
    • Free vs. paid Cloud applications
  • SMB Cloud Future: When will Cloud usage patterns change – and how?
    • Overcoming Cloud Adoption barriers                                                                     
    • Tracing the trajectory SMB Cloud usage: Where are we heading from here?
    •  Workload and application perspectives
  • SMB Cloud Security Management
    • Roles and responsibilities in Cloud security management
    • Mid-market – management responsibility is increasing
  • Key attributes of Successful SMB Cloud solutions
    • Assessing success: key Cloud solution elements
    • Difference in needs across small and mid-market businesses
    • BDM and ITDM perspectives

For more information on Techaisle’s SMB Cloud Computing Adoption Trend research, please contact This email address is being protected from spambots. You need JavaScript enabled to view it.

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Small Businesses exhibit remarkable consistency in their business Value-Statements

Across geographies (US, Germany, Australia and India) and across different years, small businesses are showing remarkable uniformity and consistency in their response to which value statement best describes their business.  We first asked small businesses in 2010 (for India in 2012) to tell us which one of the following statements best described their business success:

    • Business success depends upon a strong relationship with the customer & being responsive to their demands

 

    • Business success depends upon implementing highly efficient & optimized processes to deliver products/ services at the lowest possible cost

 

    • Business success depends upon implementing cost effective IT solutions to improve productivity, efficiency and profitability

 

    • Business success depends upon ability to consistently innovate and bring cutting edge products to market



We did expect customer relationship to be garnering highest number of responses. What we did not expect was the rapid rise in efficient process implementation with the size of business. We certainly did not expect the same sentiment to be represented across four different countries – US, Germany, Australia and India.

In 2014 we repeated the question to a completely different random sample of small businesses and we got similar responses across all countries.

The data clearly shows that for very small businesses, business success is dependent upon customer delight whereas for 50-99 employee size businesses, process efficiency and optimization also become important. The data consistency exhibits that irrespective of size or maturity of country, small businesses have similar mindsets in what defines their business success. With this foundation in place small businesses systematically build their business but the rate at which they are able to truly scale and achieve their value statements becomes dependent upon the absorption of IT. In fact, the role of IT has increased by an average of 38 percent between the two years of comparison. In today’s market, IT is generally delivered in the form of systems that improve sales process efficiency and visibility, collaboration, project management, analytics and social marketing systems that capitalize on connectedness within an economy that increasingly relies on person-to-person, cloud-enabled communications.

techaisle-small-business-value-statement-blog

 

There is tremendous future interest within SMBs in cloud-based marketing systems, sales systems, and solutions supporting business operations. Availability of cloud-based business solutions will drive tremendous growth in automation across seven functions:

1/ Marketing solutions
2/ Sales systems
3/ Customer service solutions
4/ IT Operations solutions
5/ Solutions supporting business operations
6/ Solutions supporting financial operations
7/ Solutions supporting HR/talent management

And when we further consider that each solution area can (and often does) incorporate multiple applications, and that some cloud applications are outside of these seven areas, we will see that both the scope and depth of cloud workloads will increase to support small business value-statements.

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80 Percent of SMBs say Cloud Computing helps Grow Their Business

Techaisle’s recently completed US SMB Cloud Computing Adoption Trend research shows that Cloud computing – which IT suppliers often position as a means of reducing cost – is viewed by 80 percent of US SMBs as a solution that contributes to business growth. This is a huge departure from previous years when reducing cost used to be the overarching objective. It implies that cloud vendors and resellers should expand their marketing dialogue beyond the cost and CAPEX vs. OPEX motivations for cloud adoption and focus on ways in which cloud-based solutions enable SMBs to expand their reach to new markets and customers. In fact, over 40 percent of SMBs state that business agility and new capabilities are driving SMB cloud adoption.

This new trend of SMBs adopting cloud for business growth creates a “perfect storm” of opportunity for cloud computing. It satisfies the demand for new technology-enabled business capabilities such as mobility, social media, business intelligence/analytics and collaboration by providing a platform for supporting these initiatives. At the same time, as IT continues to struggle with cost control, cloud provides a clear means of reigning in CAPEX and reducing management costs.

Techaisle’s survey data shows that while there is broad recognition of the importance of business agility as a cloud benefit, a “mid-SMB” niche exists – stretching from 50-250 employees – in which IT productivity is the overarching cloud objective.

The key reasons for using cloud and benefits realized vary by size of business as well as issues that are of critical concern to SMB organizations. For example, small businesses (1-99 employees) focus tightly on business benefits: increased business agility is the most compelling cloud benefit, followed by obtaining capabilities that would have been cost/time prohibitive, reducing business process-related costs, and improving business staff productivity. Mid-market businesses (100-999 employees) also appreciate these outcomes – but the highest-ranked benefit of cloud is IT related, with “make our IT staff more productive” cited as a compelling cloud benefit by nearly 60 percent of mid-market businesses.

Drilling down into the different sizes of businesses the 1-9 micro-business group also places a high value on using cloud to reduce process costs, which makes a great deal of sense, since these tasks are likely not automated in any fashion today. Respondents in the 250-499 employee size segments prioritize use of cloud to increase business user productivity, while the 500-999 employee segments is focused on cloud delivery benefits such as capabilities/agility and IT productivity. Analyzing the data by BDMs and ITDMs, the study finds that these groups have different perspectives on how cloud delivers value to their companies.

Marketers can use this data to establish broad themes for the US SMB market, and then tailor their appeals to specific sub-segments based on demonstrated needs and expectations. For more details or to learn about Techaisle’s SMB Cloud Computing Adoption Trends report please contact This email address is being protected from spambots. You need JavaScript enabled to view it.

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SMB Cloud Resellers: Recurring revenue is not the sole indicator of cloud business success

Techaisle’s SMB Channel Partner study shows that while cloud drives recurring revenue, profitable cloud channel members report that they drive more than 40 percent of revenue from non-recurring sources (such as services and attached product sales). Channel partners that are overly-reliant on recurring revenue are not achieving success in their cloud businesses; the companies in the Unsuccessful group report that more than 80 percent of revenue is derived from recurring sources.

techaisle-smb-cloud-resellers


 It is important to drive revenue from multiple business lines. While more than 50 percent of revenue for successful SMB Cloud channel partners is derived from recurring sources, unsuccessful channel partners obtain over 80 percent of revenue from recurring sources. Recurring revenue is important because one can predict earnings thereby reducing risk; however, selling licenses alone does not create a high value or high margin business. Cloud profitability requires that SMB cloud resellers combine sales of cloud services with sales of one-off consulting and products.

The market currently is comprised of two revenue sources: a large but declining on-premise business, and a small but rapidly-growing cloud business. Successful channel partners will be those that participate in both revenue pools thereby finding real advantages over single-market competitors. For example, think about a situation in which an SMB is looking for a new email system. Those that propose only physical hardware and on-premise software will be very expensive. Those that propose only cloud-based services will be much less expensive, but will not enjoy a substantial amount of revenue (a Microsoft partner would get 18 percent for the core Office 365 email connection in year one, and roughly 6 percent in second/subsequent years). A partner blending both on-premise and cloud might get both the recurring Exchange revenue plus additional product/service revenue – laptops, MDM, security software, migration and deployment services, etc. They would also achieve better margins for the on-premise products than the on-premise-only provider, since it would be more difficult to do apples-to-apples price comparisons for solutions that blend cloud and on-premise equipment.
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