Cloud Services Momentum on Track Among SMBs, Report Finds

By Nathan Eddy

Early results from IT research firm AMI-Partners’ World Wide Cloud Services study indicated small to medium-size businesses are rapidly adopting a variety of cloud services consistent with their stated intentions over the past 12-18 months. The study concluded with the economic situation still in a state of flux particularly across North America and Europe, cloud services are well positioned as a cost-effective strategy that not only reduces costs but also enables greater SMB agility.

The study confirms CRM (customer relationship management), payroll, accounting/financials and Web-conferencing tend to be the leading applications currently used in the cloud. Preliminary research also indicated adoption intentions remain strong for CRM, BI (Business Intelligence) and Web/video conferencing for the next 12 months. "Notably, there is also growing interest in using cloud-based productivity suites, along with bundling additional value-added components such as security, storage and wireless broadband access," the report stated.

Total cloud-related ICT spending among SMBs worldwide exceeded $52 billion in 2009, representing about 6 percent of total worldwide SMB information and communications technology spending, according to AMI research. "By 2014 we expect this to exceed $95 billion," said Deepinder Sahni, AMI’s senior vice president for global sizing and segmentation. "[That’s] about 11 percent of total worldwide SMB ICT spending, indicative of a compound annual growth rate (CAGR) of 13 percent."

RMITS (remote managed IT services), SAAS and Web/video conferencing are the highest-growth components within the cloud, with more than 20 percent CAGR each, AMI research discovered. "The SMB ICT landscape will get a makeover during the next 5-7 years, as new entrants and new services claim a piece of the total ICT spending pie," Sahni said. "In several instances we are seeing SMBs adding new ICT capabilities (and expanding the total spending pie) because the cloud makes them more affordable and easy to deploy, especially CRM."

Sahni said in the case of fairly simple bread-and-butter solutions and processes, including a variety of managed IT services, the cloud essentially acts as a replacement mechanism driving costs lower. "Incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs) have a strong opportunity to reposition and be viewed as a 'trusted ICT partner’ among U.S. SMBs if they can create compelling services bundles and deliver these in a highly reliable fashion," he said.

SMB preferences for cloud-based application bundles, their price sensitivity and purchase channel preferences are further explored in AMI's upcoming Worldwide SMB Cloud Services Study. This study provides coverage of: platforms and devices, IT infrastructure services, business productivity applications, business management/line-of-business applications and unified communications. The company said the research would be available later in 2010.

This article was originally published on 2010-08-18