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Techaisle’s SMB and Midmarket Cloud adoption survey of 3200 midmarket firms and 3000 small businesses globally shows that hybrid cloud has been gaining momentum in small businesses, and is already entrenched in the mid-market firms. Hybrid accounts for 37 percent of cloud using mid-market businesses today, up 28% from 2018, and is expected to capture a lot higher proportion of new spending in the next one year. Midmarket firms are moving from public clouds to hybrid deployments with current hybrid workload at 17%, up from 12% in 2018. The current penetration is the highest in the US but planned usage is highest in Europe and Asia/Pacific.

There is no clear trend on the types of workloads on hybrid environments which shows that most deployments are very specific to a customer’s needs and application delivery partner’s expertise. Typical hybrid workloads include ERP, HR, CRM, finance, operations, IoT, analytics, AI, Machine Learning, SAP 4/HANA deployments, disaster recovery, critical event management, mass storage, cloud security and cloud database. Both Azure and AWS are being used by over 90% of US midmarket firms. Red Hat OpenStack is the preferred private cloud platform for 74% of US firms and Red Hat Cloudforms is the most used cloud management solution by 80% of US midmarket firms followed by VMware vRealize. Hypergrid, Morpheus, platform9 and Scalr are in low single digits. Ansible is being used by most channel partners for orchestration and automation.

Corresponding Techaisle survey with partners delivering cloud solutions to SMBs and midmarket customers reveals that Azure Stack is the most popular platform because of Microsoft’s proactive engagement, powerful and extensive Microsoft ecosystem as well as deep product portfolio. Google Anthos and AWS Outposts are picking up pace. Interesting trend is being seen from AWS partners who are beginning to use Google Anthos instead of AWS Outposts. These partners are not only working with AWS native solutions, but offering cloud solutions which are based around other cloud platforms like GCP, Oracle or Microsoft. Some of these partners prefer to use Anthos because they find it to be more of an open technology and AWS Outposts and can be easily implemented across other environments. It gives them a wider approach in terms of compatibility. They have to pay a fixed amount when using using Anthos which is variable with Outposts. None of the application delivery partners are using tools and technology from only a single vendor. The use of Open Source is dominant.

Another view of the data collected in the survey provides fascinating insight into the extent that midmarket cloud users are willing to align different delivery methods with internal requirements. Detailed analysis and segmentation of data reveals that there are pockets of demand (and overlap in these pockets) that exist for public, private and hybrid models in each segment.

Mid-market businesses
Looking at the mid-market segmentation, we see that larger firms are likely to employ multiple cloud delivery strategies. Overall, 51 percent rely on a single delivery approach for cloud, for example, 31 percent use only private. 29 percent of mid-market businesses use two different delivery approaches, with the most common being a combination of private and public models (but not in a hybrid setting). Firms in these overlap areas are not, on average, larger than those using a single delivery method, but they do face added complexity in that they tend to have more locations.

Today, at Cloud Next 2019 in San Francisco, Google’s annual industry conference, Google announced its Cloud Services Platform, Anthos, for managing hybrid clouds that span on-premise and cloud data centers, and across multi-cloud environments. It is a big deal. It uses Kubernetes to enable migration across environments, is hardware agnostic, supports Amazon AWS and Microsoft Azure, and is subscription-based with a starting list price of $10,000/month per 100 vCPU block.

There is a thought that Anthos is a shot across the bows of AWS and Azure – and certainly, an approach that abstracts functionality from underlying cloud architecture will impinge on the ‘data gravity’ customer retention approach being used by these vendors. But IBM is at risk with Anthos as well, as the positive reception of its recent Red Hat acquisition is rooted in the promise of a single-vendor approach to providing hybrid and multi-cloud management and orchestration capabilities.

Clearly, Anthos has been developed with large enterprises as the target segment; some enterprise accounts are already early beta customers. To ease the addition of cloud as a core infrastructure platform in these accounts (by simplifying migration across in-premise and cloud environments) Google introduced Anthos Migrate, a service which will auto-migrate VMs from on-premise or other clouds into containers in the Google Kubernetes Engine.

It’s important to note, though, that hybrid cloud management is not only a point of pain within enterprise customers – it is a challenge (and arguably, a more acute issue) within midmarket (100-999 employees) firms. Consider these stats from Techaisle study of 510 US midmarket firms:

• 52% of midmarket firms are using multi-cloud
• 45% of midmarket firms have hybrid cloud environments
• 38% of midmarket firms are using multiple public cloud providers for IaaS and PaaS
• 27% of midmarket firms are planning to adopt G-Suite
• 25% of midmarket firms are challenged by how to migrate from one cloud platform to another
• 18% of midmarket cloud workloads are on hybrid clouds

Data for Europe and Asia/Pacific also very interesting current and planned adoption percentages for hybrid/multi-cloud.

The multi-cloud, hybrid-cloud journey began within midmarket firms much before it became fashionable within enterprises.

Techaisle latest research US SMB & Midmarket Orchestration, Automation & Integration trends shows that roughly two-thirds of midmarket firms are using or planning to use hybrid cloud and nearly 90% of midmarket firms using/planning to use hybrid consider orchestration tools to be “critical” or “very important”.

In today’s multi-platform world, orchestration, automation and integration are non-optional components of a functioning IT environment. The number of possible connections between systems and data sources expand logarithmically with each new platform; as IT workloads migrate (or are born) in new cloud, hosted, virtual or conventional systems, IT managers need to establish processes for connecting, balancing and optimizing systems that aren’t bottlenecked by requirements for operator intervention.

Despite the clear and immediate requirement for orchestration, automation and integration, there is little current and reliable data available on adoption and usage trends, especially within the small and midmarket business segment. To address this gap, Techaisle conducted a survey of 1,076 US-based SMBs, quota sampled to ensure statistically-reliable representation for two small business segments (20-49 and 50-99) and three midmarket segments (100-249, 250-499, 500-999). By applying attitudinal segmentation within each e-size category, capturing information on current cloud and digitalization status and probing for orchestration and automation plans and activities, Techaisle is able to deliver a unique perspective on the current state and directions of orchestration and automation within the US SMB & Midmarket.

Research presented in the report, which addresses the general topic of IT orchestration, is focused on three major issues:

• Cloud workload orchestration: orchestrating workloads and associated processes across hybrid environments
• Cloud application/data orchestration and integration: SMB requirements for services supporting hybrid business applications/processes
• Supplier requirements, gaps and opportunities: market feedback and Techaisle evaluation of the offerings that will position suppliers as orchestration leaders in the SMB segment

Highlights from the findings presented in this report include:

Techaisle SMB & midmarket cloud adoption survey shows that if US businesses follow-through with their plans for adopting hybrid cloud or for that matter, different types of cloud, then hybrid cloud penetration will have the highest jump within the SMBs, by over 100 percent while the Enterprise segment is likely to see a huge jump in public cloud adoption.

However, it is not a “gimme”. While it can be said that a hybrid model for IT service delivery is the reality for most organizations, it can also be said that smaller business may find reliance on public cloud services a simpler option. This is because hybrid IT, or hybrid cloud environments, are also the most complex to manage: while legacy systems, processes and thinking may inhibit cloud adoption, different business segments that are increasingly involved in procurement decisions may opt for siloed cloud application delivery without regard for the organization’s broader technical or overall process goals. And use of hybrid cloud will continue to increase as both a conscious strategy and as a reaction to use of both public and private resources within a single infrastructure.

A surprising outcome from the above chart is the decision trend of enterprise customers to embrace public cloud as the enterprise segment is finally finding that public cloud offers various benefits such as IT cost reduction, increased agility in business operations, increased scalability and flexibility. Public cloud, private cloud and hybrid cloud approaches each offer unique business benefits to the adopting organization. While public services can deliver rapid scale for temporary workloads or support smaller businesses that find appeal in OPEX procurement models, private cloud can deliver scale at better cost in some circumstances, while hybrid cloud offers better, faster access to formerly siloed sources of information.

Another view of the data collected in the surveys provides fascinating insight into the extent that cloud users are willing to align different delivery methods with internal requirements. When responses are taken from the small, mid-market and enterprise respondents and graphed in terms of cloud delivery method usage, Techaisle finds that there are pockets of demand (and overlap in these pockets) that exist for public, private and hybrid models in each market segment.

Related Research

360° on Cloud Computing in SMBs
US Businesses – Hybrid Cloud Adoption Trends
US Enterprise Cloud Adoption Trends
SMB & Midmarket Buyers Journey
SMB & Midmarket Cloud Computing Adoption Trends
The SMB Channel and Cloud: Success Metrics

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