Friday, 26 February 2010

Small Businesses Set To Profit From Cloud Computing

Cloud enables SMBs to get access to fully fledged IT services. The key word in this statement being ‘Services’ - SMBs need services not technology. They need a compelling business reason to spend their hard earned reserves on further IT services. They will need to buy into the concept of ‘Business as a Service’.

And this is a message that should be heeded by both the Industry, and marketing departments in particular, if Cloud is to reap the benefits that the hype suggests will be delivered. The figures are pretty impressive. IDC claims that there are an estimated 73.5 million small businesses worldwide, with a further 100 million SOHO businesses operating across the globe. 40% of all IT spend is attributable to the SMB sector, with 45% of this spend accounted for by businesses with less than 100 employees. Cloud spending is expected to reach $44 Billion by 2013, up from £17 billion in 2009 and at a CAGR of 26% this is far and away outstripping traditional IT spend. When you factor in the SMB spend predicted in this area – and that’s a big chunk of pie for service providers operating in this market.

So that’s it sorted then. We’ll all going to become very rich and Cloud will be very successful and we’ll all live happily ever after. Well not quite.

I highlighted the fact that whilst most SMBs surveyed were generally aware of the Cloud, they were somewhat reticent to dive in and procure services. Several reasons were given for this, including hype over substance, internal resistance and security concerns – all of which suggest that we need to work harder to get the Cloud benefit message across. And it’s here that we should take a leaf out of the Hotel and Catering Industry’s book. The Hotel business has successfully packaged a very complex set of business processes into a simple to understand, simple to buy all in one service, tailored to suit a particular market.

When was the last time that you phoned a hotel to make a booking and was asked: “Would Sir like to avail himself of our laundry as a service, room cleaning as a service, food as a service, ability to use the internet as a service, stay in trim during your stay as a service, watch the Winter Olympics live as a service, whilst he stays with us?”. The answer is (hopefully) never.

Whilst accepting that the hospitality industry has had centuries to ‘market its message’, the challenge for our industry outlined by both Melanie and Serguei is well made. We need to focus less on the technology, the terms which seem to proliferate on a daily basis, and more on the needs of the customer.

A customer that is currently using a hosting company for shared hosting, domain name and email can be gently migrated up the value chain as their business needs dictate. In reality they are hardly likely to make the jump from their existing basic business services to a full blown Cloud CRM system just because we believe it’s what they need. If you think about the Hotel business again, you check in and once you are a customer of that hotel, you then have the option of purchasing many services available on a ‘pay as you use basis’ – the mini bar, the restaurant, the telephone, the laundry etc.

This is the model that appears to be gathering momentum and support for successful Cloud implementation. Service providers will need to extend the value of existing offerings, transform the customer experience and reinvent the service creation process if they are to attract the SMB market.

To further use another Hotel analogy, Cloud is about evolution of services not revolution. Hosting services have been around for a while and perhaps we should think of Cloud services as ‘old wine but new bottles’.

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