Cloud services: small businesses become big business

Cloud services: small businesses become big business
By Serguei Beloussov, chief executive of Parallels

Published: April 13 2010 17:21 | Last updated: April 13 2010 17:21

A buzz around the “cloud” has been created by some IT industry analysts and commentators who predict a dramatic shift towards it satisfying more and more IT needs.

The response of technology giants such as Google, Microsoft and Amazon show how they value the opportunity the trend of delivering IT services via the internet represents.

However, while these giants and much of the hype focuses on either clouds for the mass market consumer or large scale enterprise, less is said of the opportunity represented by small businesses. Yet it is this market – currently worth more than $500bn in annual IT spend – which is leading the way in adopting cloud services.

The range and scale of small businesses (essentially any business with fewer than 1,000 employees but more closely represented by businesses with fewer than 10) make them a vague entity. Leading industry sources conservatively estimate there are around 73m registered small businesses globally – but you could easily add an extra 100m unofficial small and home offices and a further 60m estimated small businesses in China alone.

For most of these small businesses, IT distracts them from their core business. Most do not have the resources to employ IT professionals and are not interested in how the technology is delivered so long as it does what they need, is affordable and easy to manage.

In reality, web hosters have been providing cloud services that address small business needs for simple IT since the late 1990s. Today it is this sector that is the fastest growing market in the cloud and where we see the real opportunity for growth.

Buying from the cloud enables small businesses to get sophisticated, enterprise-quality IT services easily, which would otherwise be too complex and costly for them. The model offers flexibility, enabling small businesses to scale up and down quickly, based on business need.

The services are managed by experts and decision-making is simplified as small businesses can get a range of business IT services bundled together from a single provider for a monthly subscription rate. The capital expenditure of buying in-house IT is transformed into an operational expense.

The resulting efficiencies make it understandable that small businesses are leading the way in adopting this model.

Web hosters currently host more than 150m small business domains and 50m websites, with bigger players such as 1&1 and Go Daddy providing millions of small business with services such as web hosting, web applications, virtual infrastructure services, hosted e-mail and collaboration, among others.

Further growth will come about as cloud services providers deploy more sophisticated technology, enabling them to add new services and increase the capabilities of their offerings.

For example, cloud services providers currently leading the way are those that use technology to differentiate their offerings, such as providing a wide range of services that can be self-managed by non-technical people.

Similarly, those deploying automation systems are able to serve hundreds of thousands of customers at very low cost and pass these savings on to their small business customers.

As cloud services providers continue to broaden their offerings in the future, their appeal to small businesses will increase, accelerating the adoption of IT through the cloud.
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