Price Only One of Several Cloud Computing Rationales for SMBs

Carl Weinschenk
Slide Show

The Cloud Computing Fear Factor

Despite hesitancy toward cloud computing, it's having an impact on the roles of IT executives.

VoIP started out essentially as a strategy for end users, be they businesses or consumers, to save money. It was only later that the potential operational advantages of IP-based telephony compared to legacy phone systems began to emerge. That was a good thing for the VoIP folks, since the telcos dropped the price of their legacy services to compete.

The point is that the technology's first attraction rationale was the cost benefit. It is questionable whether the segment would have survived if it didn't add attractive services to the mix. It is surviving, and in style among SMBs.

The same thing seems to be happening to cloud computing, at least as far as the small- and medium-sized business segment is concerned. CRN reports on a study by MarketBridge that identified three triggers besides saving money: company growth, mobility and security were seen by respondents as keys to SMB's willingness to transition to cloud computing.

The story points to a similar study by IBM. It found that cost savings, at 73 percent, was the leading rationale, but only by a few points over manageability (70 percent), redundancy (68 percent), uptime/availability (67 percent) and rapid provisioning (66 percent).

The case for cloud-based services for SMBs-which is exactly or roughly synonymous with hosted services, depending on who you ask-is compelling. Verge1 Principal Dave Michels does a good job of lining them up at UC Strategies. The advantages include scalability, site-independence, feature richness, lack of commitment and, of course, price. His conclusion leaves little doubt on how strongly he feels the concept is a winner beyond the cost rationale:

These are the reasons why hosted voice is gaining in popularity. The sector is growing and many expect significant growth to continue over the next few years. Cloud services are more popular than ever, broadband bandwidth has never been more ubiquitous or cheaper, and hosted voice is no longer unproven.

The cloud apparently hasn't descended upon New York. According to NYConvergence, only 18 percent of surveyed New York small business decision makers claimed familiarity with cloud computing. The survey-done by 7th Sense Research on funding by Microsoft-found that 54 percent of enterprises are using cloud or are implementing a system. The overall survey again found that cost savings was one of several advantages cited, though the precise percentages were unclear in the story.

Regardless of some companies' reticence, hosted/cloud services no doubt are growing among SMBs. In-Stat sees cloud passing the $13 billion mark in 2014. The company says that the small office, home office sector-a subgroup of SMBs-are the most aggressive adopters.

At the highest level, there are three stages: a sales pitch based on price, the addition of the kinds of features and advantages listed by Michel and, finally, the realization by SMBs that those advantages exist. These stages-at least outside of New York-are being fulfilled.

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