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In-Depth

A Cloud Real Estate Rush Is On for SMBs

A Microsoft-sponsored survey of 3,000 companies shows that despite the threats of outages and security breaches, businesses are getting more comfortable with the idea of putting their data on the cloud.

SMBs are on the verge of tipping to cloud services over the next two to three years, according to a large, multicountry survey commissioned by Microsoft.

Microsoft released results of the study Wednesday at the Microsoft Hosting Summit in Bellevue, Wash., emphasizing to the 400 partners in attendance how hosting and other channel partners will be able to capitalize on the trend. By the numbers, the survey included responses from 3,000 companies ranging in size from 2 to 250 employees in 13 countries.

Key shifts compared to previous runs of the survey are occurring in SMB attitudes toward security in the cloud and the competitive advantage of cloud services, said Marco Limena, Microsoft's vice president of Operator Channels, in a telephone interview.

"In the past, most of the SMBs didn't know what the cloud could do for them. In addition to that lack of clarity, there was a concern about 'Who is going to manage my data?' They're observing within their markets that there are first-mover benefits," Limena said.

On data security, while the vast majority (70 percent) of respondents do want to know where their data is located and 30 percent want it kept in their own country, they're becoming comfortable with the idea of their data in the cloud despite high-profile security and privacy breaches. According to the survey, only about 20 percent believe that data is less secure in the cloud than it is in their on-premise systems.

Meanwhile, 44 percent of respondents reported that they believed cloud services make companies more competitive.

Speed of Adoption
In Microsoft's interpretation of the results, those factors are leading many more SMBs to plan to add cloud services over the next few years.

Overall, 30 percent of the SMBs in the survey are using cloud services now and 48 percent planned to begin using cloud services in the next two to three years. Adoption generally declines by company size, with 60 percent of companies with 101 to 250 employees using cloud services compared with 25 percent of companies with 2 to 10 employees using cloud services.

But even the smallest companies have their eyes on the cloud. Some 51 percent of the companies with 2 to 10 employees and 42 percent of companies with 11 to 25 employees planned to add cloud services in the next few years.

E-mail is one of the biggest adoption areas. According to the survey, 65 percent of the SMBs surveyed expected to be using cloud-based e-mail in the next two to three years.

The Partner Opportunity
Another data point shows a little of what the channel is up against in terms of customer perceptions, however. When asked how they'd like to acquire cloud services, 10 percent listed a hosting provider as their first choice and 12 percent listed a local reseller or systems integrator as their first choice. Comparatively, a whopping 53 percent cited a software vendor (presumably Microsoft, Google or other vendors) as their first choice.

Still, Limena identified three main channel opportunities from the survey, which could offset that software vendor advantage.

More than half of the respondents (52 percent) reported that not having the resources to get people trained was a barrier to moving to cloud services. An even larger group (60 percent) said they didn't have the resources to implement new technologies and applications. Both are core capability areas of many Microsoft partners.

The opportunity for hosting partners specifically stems from two other findings of the survey. For one, 56 percent of respondents said they wanted a single source for their IT services. For another, 81 percent answered that it was either critical or important to buy services from a provider with local personnel.

"This is exactly what hosters are positioned to do," Limena said. Microsoft contends the signs are right for hosters to develop an "aggregator/broker model," building their own channels and designing marketing programs aimed at business decision makers.

One hosting company on stage with Microsoft at the Summit is already running with the ideas from the survey. "Trust development is critical to our work with SMBs," Aaron Hollobaugh, vice president of marketing at Hostway, said in a statement.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.