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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

Techaisle study reveals that the Cloud is closing the gap between strategy and execution for SMBs and Midmarket firms

In a genuine sense, the discussion of “the cloud” is similar in scope to the discussion of “IT.” In both cases, use is a given, but the scope and impact of that use are critical to the operational effectiveness and competitiveness.

In today’s world, there is little distinction between “business infrastructure” and “digital business infrastructure;” in recent SMB survey research, Techaisle found that executives from nearly all upper midmarket firms (1000-4999 employees) agree that we have reached a “post-digital” state where all business strategy discussions include digital considerations.

Cloud is the linchpin for these strategies. A Techaisle survey of more than 2,000 firms, segmented into small business (1-99 employees), core midmarket (100-999), and upper midmarket (1000-4999), found that across this broad spectrum, SMBs universally see cloud as a way to reduce IT and operational costs, increase operational agility, and support improved business processes that drive increased efficiency and profitability.

Cloud in an SMB Business Context

For more than a decade, the cloud has been touted as a means of enabling SMBs to capture IT benefits that were previously the sole province of large enterprises: the ability to achieve both IT cost-efficiency and the competitive edge arising from ubiquitous automation that accelerates processes and unlocks the potential of new relationships, offerings, and markets. Today, SMBs and midmarket firms are seeking a zero-friction future: a state in which businesses can seamlessly deploy and integrate capabilities across multiple business areas, creating fluid systems linking core functions to new approaches to engagement, insight, and innovation.

Since 2014, the path forward has proved to be more fractious than the vision. In most SMBs, the cloud itself advanced in fits and starts, with early attempts at hosted private cloud and use of public cloud to support business-critical workloads snagging on unclear platform standards, a lack of experienced talent, economic worries, and a delivery horizon which remained stubbornly beyond practical experience. But in time, knowledge and improved technologies have addressed the rough edges.

Cloud is increasingly able to deliver real benefits to SMBs: it is both a priority and a current reality, providing business infrastructure that connects strategy and execution, responding to changing business requirements, changing customer and supplier expectations, volatile competitive pressures, and new opportunities for automation of both systems and system-dependent processes and workflows.

Six truths about cloud in the SMB

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Cloud is both scalability accelerator and inhibitor for SMBs

Every business is looking to build scalability into its operations. In IT terms, scalability is often tightly defined in terms of the potential to add capacity to specific system. This is part of the answer – but from an SMB perspective, scalability centers on the ability to increase the impact of each employee: by increasing productivity by delivering new functionality, new systems, and more capacity as needed. Techaisle’s SMB and Midmarket cloud adoption survey research shows that SMBs view cloud as the primary platform for scaling their IT systems – and their businesses. Techaisle global survey of over N=5000 SMBs discovered close connections between cloud and key business objectives:

● 65% of SMBs believe that cloud improves their ability to grow and scale their businesses
● 47% see cloud as a means of increasing agility in business operations – a core requirement for growth-oriented SMBs
● 41% state that cloud allows them to launch new products and services more quickly
● 40% report that cloud-based systems improve the productivity of business users.

It is no accident that 91% of SMBs (Source: 2020 Techaisle US SMB and Midmarket Cloud Adoption survey) are using cloud applications today, and 83% state that their businesses rely on technology. Cloud is the platform for small and midmarket businesses, and effective use of cloud is a key element in SMB viability. Similarly, 2020 Techaisle Europe SMB and Midmarket Cloud adoption survey data shows that 87% of SMBs are using cloud.

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SMB and Midmarket IT maturity segments – cloud adoption challenges

Techaisle’s SMB & Midmarket IT maturity segmentation reveals that 52% of midmarket firms and 16% of small businesses (down from 31% two years ago) belong to Advanced IT segment and 37% of midmarket firms (up from 14% two years ago) and 0% of small businesses are in the Enterprise IT segment.

IT products are often described as having ‘a market’ – but ‘the’ IT market is comprised of many segments, each of which has its own approach to IT adoption. Some industry sectors (e.g., aerospace) tend to move faster than others (e.g., retail) and different countries and regions invest in new technologies at different rates. Until they are supplanted by new solutions, mature IT products are acquired at about the same rate by all buyers. These technologies generate the majority of ‘run rate’ revenue in the IT industry. When IT industry growth opportunities are discussed, the focus often turns to earlier-stage technologies. Sellers of these technologies tend to focus on advanced segments (large accounts, particularly in leading-edge industries). SMBs are generally viewed as a secondary market.

Four IT Maturity Segments

However, the SMB market is not a monolith. Techaisle research has identified four attitudinal/behavioral segments that have different approaches to IT adoption. Suppliers who understand the scope and characteristics of these segments are able to expand their target markets and develop strategies geared to reaching high-potential SMB prospects. These suppliers ultimately have access to an expanded TAM, and have the insight needed to align marketing investments with priority customers.

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