By Jenni Sach, UK market manager, Colt
The Eurozone crisis has left many businesses battling to remain competitive, retain market share and devise strategies for sustainable growth. None more so than small and medium sized enterprises (SMEs), who are particularly vulnerable in the current climate. Critical to their survival and ongoing success are fast, high quality, cost effective IT systems. However this in itself presents significant challenges to SMEs in terms of the capital investment and resources required for a successful in-house IT function.
Adopting cloud-based IT services presents an attractive solution to addressing this problem. Using solutions and services delivered and used in real time over the Internet not only helps SMEs meet a broad range of business demands, but is fast becoming an integral part of the nature in which SMEs operate. Worldwide, approximately 14 percent of small firms and 36 percent of medium-sized businesses currently use cloud-based services . Indeed, SME spending on cloud-based solutions is expected to grow by almost 20 percent annually over the next five years . For businesses of all sizes, cloud computing investment is growing six times faster than traditional IT, predicted to represent 80 percent of the market by 2020 .
It is important SMEs everywhere recognise the growing business case for adopting cloud-based IT solutions. To remain competitive SMEs need to use IT effectively, not only to cut costs but to simultaneously improve operational efficiencies, transform their business models to gain a competitive edge and even support expansion into new markets.
However, only two percent of European small businesses have currently moved all applications to a cloud-based infrastructure and a third have little or no knowledge of how the technology can benefit their company . Trust, security, interoperability, portability and data protection, location and jurisdiction are all barriers to cloud adoption by SMEs. Yet businesses cannot afford to ignore the potential benefits offered by cloud-based services. For the SME community, five reasons to adopt cloud-based services, in particular, stand-out:
1. Reduced Costs
The most compelling business case for the adoption of cloud-based services by SMEs is often cost, specifically reduction in capital expenditure and greater efficiencies in operational expenditure. Almost all users of cloud-based services see cost savings, with a peak of between 10 and 20 percent3.Traditional IT systems often require heavy upfront investment which significantly impacts margins and therefore acts as a barrier to growth and exploitation of new markets. Conversely, cloud-based IT delivery models effectively eliminate this capital expenditure and provide increased control over operational costs due to the economies of scale that can be achieved, creating scope for increased capital investment in other more strategic areas of the business.
2. Developments in technology
For SMEs, traditional IT innovation has always acted as a double-edged sword. On the one hand it helps drive business growth, but with the risk of systems quickly becoming obsolete it can prove difficult to manage effectively. The continual upgrades offered through cloud services allow SMEs with limited funds to benefit from immediate access to the latest technology. As further software and system updates are released, cloud-based solution providers can ensure applications are up to date and delivered seamlessly to users without the financial burden that previously forced business owners to think twice before upgrading.
3. Information accessibility
Growing preference for more flexible working arrangements coupled with a proliferation of smart mobile devices has led to a redefinition of the workplace. No longer a single fixed physical location, the workspace can be virtually anywhere, and even on the move. For this to work without impacting productivity, it is imperative that employees have seamless access to information on demand. Cloud-based IT services allow SMEs to facilitate a more flexible working style by allowing access to information from virtually anywhere with an internet connection.
In a business environment rapidly embracing remote and mobile operations, SMEs are starting to face the same security threats traditionally posed to larger organisations. However, they often lack the expertise and resources to manage these risks. Understandably, in handling sensitive information critical to their business every day, 30 percent of European SMEs are concerned about security, 25 percent about trust-worthiness and 24 percent about where their data is located3. An inherent benefit of adopting cloud-based services is the fact that data is stored remotely, with built-in data management services providing the high quality secure operations needed without the in-house cost of managing data on premise. When evaluating providers, SMEs should endeavour to opt for those with the highest levels of security, including protection via extensive firewall and backup, underpinned by guaranteed service level agreements.
Scalability adds an extra dimension to the value of a move to cloud-based IT solutions whereby services can be ramped up, or scaled down, to meet changing demands in line with business expansion and requirements. With cloud-based services, SMEs need only pay for the resources they require, with the flexibility to add more resources as needed during busy periods. In business situations where SMEs would traditionally have been limited by the constraints in the size and capabilities of their in-house systems, the scalability offered by cloud-based solutions provides SMEs with the ability to develop and grow quickly and easily.
Now is the time to make the move to cloud-based services
Cloud-based approaches present an opportunity for SMEs to focus on long-term business growth rather than investment in continual IT development and maintenance. SMEs can now benefit from the speed, scalability and security previously only available to their larger competitors. This is now to a point where even the smallest of players are equipped to respond to rapid market changes and opportunities as well as collaborate in real time with customers, suppliers and colleagues. But with the current economic constraints to growth in Europe, there has never been a more compelling time for SMEs to invest in cloud-based approaches, which allow small businesses to benefit from the latest tools in IT without the complexity of managing them.