SMBs Show Signs of Coming Round to Cloud, but on Their Terms
Technology, and more specifically the Web, is changing the nature of the small- to medium-sized business (SMB). Where once a small business needed a fixed location such as a serviced office or a converted barn as its base, today more and more groups of geographically dispersed colleagues are able to work together virtually using a wealth of readily available, and for the most part free, Internet tools.
Liberated from the burden of a fixed office infrastructure, it is a natural step for these businesses to embrace the Cloud to take advantage of its flexibility, its pay-for-what-you-use cost structure and its dynamic access-anytime-anywhere environment. With this comes a desire to manage and share data between geographically distributed teams together with partner and customer ecosystems.
According to market analyst group IDC, spending on IT cloud services will grow from around $416 billion in 2008 to some $42 billion by 2012. IDC also predicts cloud spending will account for 25 percent of annual IT expenditure growth by 2012, and nearly one-third of growth the following year.
It is perhaps surprising then that even as recently as January 2011, groups monitoring SMB trends were reporting that small businesses were yet to be convinced of the merits of moving to the Cloud. For example, a survey of 1,300 SMBs by PeoplePerHour.com, a website for freelancers, found that nearly three-quarters of SMBs were not using public cloud computing solutions. Of the 900 or so not using the cloud, one-half said they did not know what the term meant, 36 percent failed to see a need for it, 10 percent thought it was too expensive, and 9 percent said they were concerned about security problems.
The SMB market has been held back by confusing use of Cloud and its associated terminology by numerous IT vendors. Other vendors who make their living providing physical on-premise hardware have contributed by spreading fear, uncertainty and doubt wherever they can. The net result where SMBs are concerned is that they will continue to hesitate to invest in public Cloud applications. This is a pity. Early evidence shows that companies that who moved some of their applications to the cloud have been able to achieve rapid returns on investment; usually within six months to a year.
Public cloud does offer a compelling business case. You can have infinitely flexible subscription-based services on demand at a fraction of the cost of purchasing the equipment for oneself. Most non-virtualized servers run at about 1 to 5 percent of capacity most of the time. Moreover, virtualization generates efficiencies that allow you to do much more with much less.
So why are so many SMBs holding back? The answer, it would appear, is that many SMBs are not ready to trust public cloud providers. Their main concerns are over privacy and security. They also worry what will happen to their data if their Cloud-supplier goes out of business. Adding to all of this is the fear of letting go of control.
Recognizing this, Gartner has forecast that IT organizations will spend more money on private cloud computing investments than on public cloud providers through 2012. Analysts there see private cloud services to be a stepping stone towards future public cloud services. Some private cloud offerings are interface-compatible with public cloud offerings. This has the potential of allowing the use of public cloud resources, on demand, to support sudden spikes in required processing power.
To begin, SMBs are expected to try out small private cloud computing initiatives. These will help to build confidence in cloud services technology gradually. For services like email hygiene that already have a credible track record as cloud services, SMBs are likely to use private cloud services to evaluate the return on investment from cloud while waiting for public offerings to mature. Over time private and public Cloud resources are expected to blend together to form hybrid services. SMBs may well find themselves relying on private cloud services for many years, perhaps decades, as public Cloud offerings mature.
Already there is evidence emerging to support this. In SpamTitan's latest poll of its 2,500 SMB customers worldwide half of those electing to respond to the survey sent to said they expect to leverage Cloud computing for cost savings while 44 per cent confirmed plans were already in place to move key applications such as email filtering and storage to the Cloud. The results of this poll are in strong contrast to previous polls when the majority of SMBs declared themselves to be suspicious and undecided about the respective merits of hosted applications.
These findings are in line with Gartner's Strategic Technologies for 2011 forecast, which predicted that Cloud services would start to deliver technologies in a more readily consumable form over the next three years starting this year.
The appeal of private Cloud stems from the fact that control remains with the SMB in that they fully manage the solution even though it resides in the cloud; i.e., the control they have is the same as if the solution were on-premise. This is much more suited to SMB culture. Of course, security and privacy still need to be designed into the private cloud in a systemic way. Ease-of-use is equally important. Users should be able to allocate storage, processing or other resources without having to contact someone in IT. Finally an in-built-in subsystem is needed to track usage for system management and chargeback to departments.
One of the first and most obvious applications to move to the Cloud is a company's email filtering or anti-spam solution. Security solutions like spam and web filtering are perfect for Cloud deployment because they free-up in-house resources from having to stay on top of Net-borne threats in a way that maximizes flexibility and cost savings. Organizations have been able to opt for hosted email protection for many years using solutions such as MessageLabs/Symantec or Postini. Recent developments in Cloud technology and virtualisation have allowed other vendors to enter the market, bringing down the costs of this model to levels that will be attractive to many more SMBs.
There are many hosted solutions on the market, most of which use a hybrid or shared tenancy model. As mentioned, many SMBs have doubts about how private or secure these really are. Some vendors, like SpamTitan, believe that single tenancy cloud-based appliances could be the answer.
The idea behind the single tenancy solution is that small businesses can have instant access to hosted anti-spam protection in a way that is entirely on their own terms with no shared resources. They can have extremely reliable anti-spam performance without having to buy and maintain their own physical appliance or virtualisation software. And because it is private they can activate it at the click of a mouse and configure it to be fully optimized to their business's needs in just a few minutes. In short, SMBs can have the best of both worlds: high availability, performance, and reliability combined with an optimized, affordable package.
SMB customer adoption of cloud computing is rising strongly with cost savings and flexibility among the key motivators. Virtualisation is the underlying technology driving applications from costly infrastructure models to the cloud. Single tenancy email filtering solutions are among the first generation of SMB-friendly Cloud solutions offering even more flexibility to customers as well as increased efficiency, affordability and ease of use.
In the immediate term, it seems more realistic to expect a hybrid approach to Cloud. The hybrid approach means that SMBs pick and choose for themselves which applications to keep on-premise and move to the Cloud. This gradual approach place the Cloud option on the SMBs own terms and is growing in popularity.
Every organization will weigh up the pros and cons of what assets to move into the cloud on a case-by-case basis. Those who opt for full public cloud will likely benefit from more rigorous attention to security measures from their third party provider than they are used to in-house. They will also wonder what will become of their data if their provider should ever go out of business.
The hype of cloud computing is that existing IT architectures and processes can be simply replaced by the cloud. The future reality for IT, however, is a more complex picture. Larger enterprises will continue to have an IT organization that manages and deploys IT resources internally, some of which will be private clouds. In contrast, straightforward private cloud applications like email filtering, will be among the first to be widely adopted by SMBs as they seek to introduce some efficiency savings to limited budgets and relief to fully-stretched IT resources.
To sum up, more and more organizations of all sizes are requiring greater flexibility from IT. Cloud does not have to be about choosing between on-premise or hosted technologies. The market will always favor the option that offers the greatest choice. So SMBs will not be content to be restricted to a straight choice. Instead they will move to Cloud on their own terms. This demand is growing steadily and there is therefore great opportunity for vendors and resellers who can offer this choice and allow SMBs to maximize their potential return on investment.
Ronan Kavanagh is responsible for Global Sales and Marketing for the SpamTitan suite of products. Educated in NUI Galway, Ireland, he joined Copperfasten Technologies in June 2004. Prior to joining Copperfasten Ronan worked with Eurokom, an Internet Security Services provider, delivering a wide range of solutions to both Government and large blue chip companies in Ireland. During his time with Eurokom Ronan was responsible for the ongoing sales development of Eurokoms managed email service which cumulated in Eurokoms inclusion in the Government VPN, a multi million euro central government led initiative to provide centralized WAN services to all Government Departments. .