What’s Driving the Deep and Growing Cloud/SMB Relationship

Carl Weinschenk

IT Business Edge: SMBs have been using the cloud for a while. This is not a new thing. Are they becoming more savvy in how they use the cloud? Is their use changing?

Agrarwal: In many SMB organizations, cloud may have first been introduced as a means of reducing CAPEX and/or overall IT costs, but today it is viewed by SMBs as a means of increasing business agility and introducing capabilities that would have been cost or time-prohibitive to deploy on traditional technology. Companies in the “middle” of the SMB market – those with 50 to 250 employees – emphasize the ability of cloud to make IT staff more productive, while smaller and larger organizations are primarily interested in enabling business staff. Our research also shows that SMBs use a mix of private and public clouds – and that organizations often use two or three of these approaches simultaneously. The data suggests that the cloud deployment process starts with the business requirement, and moves back to the deployment model – rather than starting with a platform, and expanding across incremental workloads.

IT Business Edge: Is its use by SMBs staying the same?

Agrarwal: Their use is definitely changing. Generally, SMBs have used cloud to supplement IT infrastructure resources. Two examples are procuring cloud-based storage to offload data from on-premises drives or by using cloud for backup. Cloud has also made its way into SMBs as a means of supporting non-core applications and related processes. For example, cloud might be used to automate previously manual tasks in HR or customer support that aren’t linked to financial and production systems.

But data from Techaisle’s SMB and Midmarket Cloud Adoption Survey suggests that use of cloud is expanding even into business-critical applications. We asked SMBs to indicate the areas of their operations where cloud has been or will be applied. Nearly half report that they are using or planning to use cloud for IT infrastructure. Thirty-seven percent state that cloud will be deployed to support non-core processes and applications. However, nearly 30 percent say that they are using or are implementing cloud to run at least some of their core applications. Given that these core applications are not changed or re-platformed very often, 29 percent is a surprisingly high figure. Cloud is expanding beyond IT-specific uses and niche applications, and is increasingly seen as a viable platform for even business-critical process support.


The data clearly demonstrates that cloud has achieved wide penetration, at least for initial deployments. More than half of small businesses are already using some form of IaaS and SaaS [infrastructure-as-a-service and software-as-a-service]. Penetration in both areas is expected to increase substantially. In the case of SaaS, it will reach nearly 100 percent for firms with 1 to 99 employees when current plans have been instantiated. Midmarket figures are even higher:

Nearly 85 percent of U.S. businesses with 100 to 999 employees are already using SaaS, and nearly all of the remaining firms have plans to adopt it.

Other significant data:

  • Two-thirds of midmarket businesses are using IaaS. The sum of current and planned use indicates that penetration will reach 90 percent in the foreseeable future.
  • PaaS penetration is at 64 percent today, and is expected to reach 85 percent. PaaS environments often lead to SaaS development, so Techaisle expects that this trend will add to the quantity and variety of SaaS applications used in this segment.
  • Nearly three-quarters of midmarket firms are using or planning to use communications-as-a-service.

IT Business Edge: At the highest level, what is the biggest trend in SMB use of the cloud right now?

Agrawal: Through its relatively brief history, cloud projections have been hampered by the “hockey stick” phenomenon. Cloud is growing in multiple ways simultaneously. The number of SMB firms using cloud is increasing, the number of individuals using cloud within these firms is increasing (e.g., as business users in different areas and IT workers find discrete uses for cloud-based systems), and the number of platforms and applications in use within each organization is increasing.

These compounding growth curves drive extreme expectations that are difficult to digest: Even as we see articles discussing 500 percent annual growth in SaaS high fliers, we tend to have an intuitive belief that at some point, the curve will start to level out. Techaisle’s view is that cloud is no longer a trend that is discrete from mainstream IT. Cloud is not a future issue – it is an essential (if new) component of SMB IT. The key now is automation and orchestration.

IT Business Edge: SMBs cover a huge area -- from SOHOs to pretty big businesses. Does cloud have a sweet spot in this category? Is it used differently by different subgroups?

Agrawal: There are several differences in adoption between small and medium-sized businesses with respect to the type of cloud technology being used. Techaisle data shows that small businesses (1 to 99 employees) are reaching a saturation point in terms of cloud adoption. Midmarket businesses of 100 to 999 employees are ahead of the small business segment with respect to cloud. Future small business behavior is likely to echo current midmarket activity patterns.

Small and midmarket respondents are most likely to report that cloud’s primary benefit is its ability to deliver better and faster access to critical information. Both groups also agree on the second most important benefit from cloud, which is increased sales and revenue. In fact, for the most part, the two groups are in lockstep. This concurrence extends to bottom-line benefits as well. We believe that cloud will continue to expand in the SMB market because its followers perceive cloud as delivering the same kinds of business benefits that prompted market leaders to commit to cloud initially.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.


Add Comment      Leave a comment on this blog post
Sep 8, 2016 12:12 AM Vipul Vipul  says:
Without any doubt it is true that cloud computing has the potential to add great value to SMBs.. There are hardly any cases where the Cloud is not involved. Be it Sage, QuickBooks, Xero, FreshBooks, and all other accounting software biggies are already up with different Cloud-based services to serve the accounting needs of SMBs and CPAs. Reply

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