SMB Cloud Computing Growth Benefits Service Providers: AMI

By Channel Insider Staff

As cloud computing continues to gain acceptance in emerging markets, service providers--such as telcos, multiple system operators and hosters--are well-positioned to gain mindshare and become an important route to market (RTM) for small to medium-size businesses acquiring cloud solutions, according to a report from IT research firm AMI-Partners.

The company's recently released 2011 Route-to-Market Opportunity Model shows that in emerging markets, such as China, India, Brazil and Russia, SMB cloud services spending and investments through service providers will increase nearly sixfold from $111 million in 2011 to $615 million by 2015. This represents a four-year annual growth rate of 54 percent the largest among all RTMs tracked by AMI and far outpacing the growth in total software-as-a-service (SaaS) spending over the same period.

"Service providers in emerging markets will gain considerable market share in the cloud services space, due to several key factors," said Rohan Bose, associate for AMI's channels practice. "The first is due to mergers and acquisition activity within the channel landscape. Larger telcos and service providers are in the process of acquiring smaller VARs and local channel partners/resellers." Bose said the acquisition of these partners allows service providers to diversify their product portfolios and enter the cloud market by providing basic SaaS solutions (such as accounting, business intelligence/analytics, email and CRM).

"This is an important step for many telcos and MSOs, as they believe that their traditional offerings such as voice, data and video services will begin to enter a phase of modest growth over the next couple of years," he said. "Cloud services allow service providers the ability to meet the growing SMB demand and differentiate themselves from other competitors."

The second factor for the expected increase in service providers' share is their ability to bundle SaaS solutions with broadband and high-speed Internet connectivity. Other cloud providers such as channel partners can bundle multiple SaaS applications together, but cost-conscious SMBs are more likely to purchase bundles containing broadband. Bose explained that as the demand for cloud services continues to rise, SMBs in emerging markets will require access to high-speed Internet to increase business efficiency, and it is the service providers who are uniquely positioned to offer such packages.

Finally, many of these service providers offer data centers and hosting capabilities to SMBs looking to store infrastructure externally. Similarly, they can offer data center hosting to traditional channel partners such as VARs for the same reason. Other channel partners who require space to host their own apps often turn to service providers to meet their needs. AMI studies have shown strong interest by channel partners to partner with service providers for hosting needs, but it is up to the service providers to foster and grow the relationship.

"Given the gradual shift in SMB preference, IT vendors would be wise to take advantage of this lucrative opportunity," the report concluded. "Since many smaller service providers do not yet have the necessary business applications to offer SMBs, SaaS and other cloud vendors can utilize them as a viable option to go-to-market. By entering into strategic and symbiotic relationships, vendors can help service providers add further value to their services."

To read the original eWeek article, click here: Service Providers Gain From SMB Cloud Computing Growth: AMI
This article was originally published on 2012-01-12