SMBs Poised to Fuel the Cloud Services Market

SMBs Poised to Fuel the Cloud Services Market
by Cameron Bell

If there’s a need for more proof that the cloud services market is here to stay for the foreseeable future, research from Compass Intelligence on small and medium-sized businesses (SMB) demonstrates it. The cloud services market as a whole is growing, and the SMB sector is one of the fastest-growing areas. Currently, there are more than 12 million SMBs in the U.S.–and 22 million worldwide–and they’re already spending more than $150 billion on telecom services. This sector is growing rapidly and has been for the last decade. As a result, the SMB cloud market currently has a 40 percent compound annual growth rate (CAGR), and it’s projected to remain so for at least the next five years. What’s driving the high CAGR?

1 – Lower Barriers to Entry One of the biggest factors driving SMB cloud adoption is that the Internet is making it far easier for small and medium-sized businesses to get started. When all someone needs is a website to have a business, that means a lot of hungry SMBs looking to grab customers any way they can.

2 – Reduced Need for Expertise On-Staff Currently, 70 percent of SMB cloud spending comes from companies with five to 99 employees. Companies on the low end of that scale simply might not have the budget for an extensive list of contracted experts. Being able to outsource matters like IT management or CMS (content management system) platforms means companies can focus on their core business without spending their budget on in-house experts.

3 – Increased Data-Handling Regulations In most of the high-tech countries around the world, more regulations are being implemented concerning the proper handling of data, especially confidential customer information. Regulations on storage, access, and length-of-retention can change rapidly, but the responsibility is on businesses to be informed of the regulations and to comply with them. SMBs lacking on-site expertise increasingly need industry partners who can ensure their regulatory compliance. Otherwise, the financial penalties from even a single data breach can be ruinous.

4 – Simplified Contact Pathways One area experiencing large booms, even within the cloud industry, is that of telecoms offering direct hosting for computer systems. Besides allowing SMBs to remain relevant to existing customers, this allows SMBs to pare down the list of contacts handling their services. Being able to consolidate all telecom-related tech support to a single partner is a major selling point for SMBs who are currently juggling too many vendors.

5 – Predictable Billing Most SMBs are running on tight month-to-month or even week-to-week budgets, and they cannot afford to have significant spikes in service fees. Since most cloud vendors offer guaranteed contracted rates and sometimes even include hardware upgrades with their fees, it makes both IT and telecom expenses far more predictable from a budgeting perspective.

If a SMB has had one or two “near misses” with an unexpected service bill that nearly breaks the budget, that SMB will be listening when a cloud provider says it can eliminate that uncertainty. How to Grow the Cloud Business The cloud industry is booming among SMBs, who are ready and willing to pay for services that bring convenience and cost savings. Cloud providers that can illustrate these benefits to SMBs will grow their client portfolio, and the SMB clients will be better poised to focus on their core business without unnecessary distractions.

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