Access and Feeds

Cloud Computing: A Slow Spread to Small and Medium Sized Businesses

By Dick Weisinger

Cloud-based application vendors are increasingly targeting small companies (1-99 employees) and many small companies have signed up, primarily for reasons of cheaper cost and greater agility.   But there are also very many small companies that still think of themselves as too small to be able to adopt hosted services.  The perception is that SaaS and cloud-based computing is something that requires special expertise which they do not have or that cloud-based computing is unaffordable and better suited for much larger companies.  Reluctance on the part of these small companies may be more of an education gap than anything else.  As companies learn more about it, many are quick to warm to the possibilities that cloud computing offers.

Michael McDonald, Senior Associate with AMI-Partners, said that “small businesses have been laggards in adopting new technologies that fall outside their comfort zone, often looking to larger firms as test cases… The larger issue is the lack of knowledge regarding Cloud.  Even though some budget has been allocated for SaaS products, we see a gap between planned and actual spending. Small businesses have the capital available to make significant advances in the Cloud; however, they are still uncertain as to how a Cloud solution will benefit firms of their size.”

McDonald said that “cloud-related Information and Communications Technology (ICT) spending is projected to account for a sizeable portion of total Worldwide SMB ICT spending in 2010. Cloud providers are racing to deliver functional, cost-effective solutions to small businesses worldwide. ”  A recent AMI-partner report found that in the small business space the most popular SaaS-style applications are CRM, payroll, accounting/financials and web-conferencing.

Deepinder Sahni, AMI’s Senior VP for Global Sizing and Segmentation said that “the SMB ICT landscape will get a makeover during the next 5-7 years, as new entrants and new services claim a piece of the total ICT spending pie.  In several instances we are seeing SMBs adding new ICT capabilities (and expanding the total spending pie) because the cloud makes them more affordable and easy to deploy, especially CRM.”

The AMI-partner report estimates that global cloud computing and hosted IT spending for SMBs was more than $52 billion in 2009, or six per cent of their overall IT expenditure.   That number is expected to increase to $95 billion by 2014.
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