Techaisle Blog

Techaisle believes that in about 5 year’s time, SMB Cloud Computing will begin its steady route of complexity of client-server technology. Client-server technology (alternatively server-based computing) became increasingly complex to implement and maintain because of the following reasons:

• Lack of control


• Complexity in development and usage


• Muddled TCO


• Intricacies in Data Integration


• Expensive implementation


• Dependency on Consultants


• Too many Vendors providing niche solutions

Historically, these are the very reasons that  gave rise to thin-client computing which quickly transformed its nomenclature to Desktop Virtualization. Again the promise of lower TCO, “access anytime, anywhere”, centralized computing with de-centralized user capabilities, disaster recovery and standardization is still struggling to make a definitive statement for SMBs.

Similar signs are already becoming visible in the Cloud Computing arena. The beneficiaries of this complexity will be three different types of entities:

1. Those that provide consulting to SMBs prior to Cloud Computing Implementation


2. Those that provide consulting and data integration across clouds post cloud implementation for SMBs


3. Those that have a stack of offerings providing not only cloud solutions but also seamless data exchange capabilities for SMBs

Anurag Agrawal
Techaisle

It should come as no surprise that marketing to SMBs is hard – harder in many ways than marketing to enterprises. The diversity and vast size of the SMB market is the primary reason for why getting and supporting SMB customers is such a hard task. Most Cloud vendors design their products with larger enterprises in mind with SMBs being an afterthought. Even if there are any SMB specific requirements that become part of the solution they are typically overshadowed by other enterprise requirements. This is a particular problem with Cloud based services which are designed to scale and so selling those to SMBs becomes a matter of configuring a price that SMBs can digest.

Little if any thought is given to whether a Cloud service has direct business relevance to SMBs. But as the Techaisle SMB computing survey data shows, vendors must demonstrate direct business relevance if they are to succeed in gaining SMB customers. Despite all the marketing around productivity and line of business Cloud services, SMB Cloud adoption is led by industry specific services. This aspect provides valuable insight into SMB decision making where Cloud services are concerned. When evaluating packaged software SMBs are more concerned with issues surrounding application compatibility, maintenance, cost, integration, training and support. It would appear, however, that this criteria changes when applications are evaluated as Cloud services. The key question appears to be how quickly can a Cloud service impact their business. This makes justifying purchase of industry specific services rather an easy one.

It is clearly not the only criteria though. The same survey shows high levels of adoption of hosted email, Cloud storage and security services. While all these have indirect business relevance in that they are foundational IT services, they are essentially a cost line item in an SMB income statement. SMBs are migrating these services to the Cloud because it is also an easy decision. SMBs are familiar with using email in the Cloud for personal reasons (Gmail, Hotmail etc.) and are therefore comfortable migrating the business email and storage to the Cloud as well. Similarly, migrating to Cloud based storage and security also are easy decisions for the same reasons.

Other services however, have not enjoyed the same success (yet). One can argue that this is simply a matter of giving SMBs time to get comfy with Cloud services. The problem as we see it is that most of the other services are marketed using a “reduce cost” value proposition. We believe a different sales and marketing approach is warranted. If reducing cost continues to be the centerpiece then for vendors this becomes a race to the bottom – which is not good for the industry as a whole.

Abhijeet Rane
Techaisle

A recently finished survey of 2900 small businesses across four countries- US, UK, Brazil and Germany shows that 1 in 5 small businesses own an iPad and 2/3^rd of these iPad owning small businesses will likely continue investing in iPads.

iPad owning small businesses are also more prolific users of social media platforms for both personal and business use. Survey shows that 1/3^rd of iPad owning businesses actively use one or more forms of social media such as Facebook, LinkedIn and Twitter whereas only 1/5^th of non-iPad users use social media.  Besides higher social media usage, these iPad owning businesses also seem to be early adopters of Cloud Computing. Nearly three times as many iPad businesses vs. non-iPad businesses are actively investing in Cloud Computing technologies.

On the question of iPads vs notebooks, not surprisingly, 15% of iPad owners prefer iPads over notebooks. On the flip side, non-iPad owners seem to be die-hard notebook users. Given a choice, 52% of non-iPad owners prefer to use notebooks only. 21% of small businesses consider all three: Notebooks, Netbooks and iPads to be important.  Those that use iPads have very low preference for Netbooks. The research shows that currently there is a clear polarization between iPad and Notebook users.

Besides being a “cool device,” the number one stated reason to purchase an iPad was sales and marketing. When specifically asked the most regular uses of iPad, the survey showed that iPads are being used for internet searches/news, emails, vertical applications and social media interaction.

96% of all small businesses that have an iPad also have a smart phone. In addition to smart phones, it is inevitable that iPads will become the center of SMB Future Workplace.

Tavishi Agrawal
Market Analyst
Techaisle

It is a given that SMB’s Cloud Computing adoption is growing. It is a given that SMB’s SaaS is fast replacing on-premise software. Does it even matter if the growth rate is 20 percent or 25 percent, whether it is US$100 billion market by 2012 or US$125 billion market by 2014? What really matters is how adoption can be accelerated. What really matters is how the right advice is given to SMBs that are adopting SaaS/Cloud Computing.

There are many forecasts in the market. Depending upon which market research firm one follows each has its own stated forecast, definition and defensible methodology.

Market will grow, it has to grow. Industry is driving SMBs towards Cloud and increasingly taking on-premise alternatives off the market. Everyone that is in the IT business is talking about Cloud Computing. There are hardly any alternatives left for SMBs.

So we should really get off the forecast and market sizing train. Instead we should concentrate on factors that will help vendors and channels to accelerate adoption. Now one may argue that all analyst firms have conducted their own surveys to determine the reasons for adoption or non-adoption. However, each of them misses the point of finding those important nuggets that identify a path for vendors and channels, a path that will lead them to Cloud Computing nirvana.

Analysts and analyst firms like us should seek answers to burning questions such as:

1. What applications should vendors focus on?
2. What comes first – back and storage, mission-critical applications, CRM, vertical applications or something else?
3. What should channels be doing in targeting the SMBs?
4. What should be done to convert the non-adopters to adopters?
5. How should SMBs be educated?
6. What is the role of multi-touch devices?
7. What will happen 3 years from now?
8. Which SMBs will regret and which will rejoice after adopting Cloud Computing?
9. How to educate channels?
10. Which market segments are more important than others?

Hence, instead of talking about SaaS/Cloud Computing Spend and growth rates, let us begin a sensible dialog about 10 “thundering” questions about Cloud Computing. You can even check out Techaisle’s Cloud Computing reports here.

Tavishi
Techaisle