Cloud computing: the SMB perspective

Attitudes are positive, but not all are taking up cloud services

Clouds picture

Cloud computing is entering the vocabulary of an increasing number of small to midsized businesses, with a growing appreciation of the benefits it can provide. But feedback from the sector suggests that many companies still struggle with what exactly it can do for them.

The outlook emerges from a report carried out by the Manchester Business School and Vanson Bourne, and commissioned by cloud hosting company Rackspace, and a round table discussion to mark its release.

Titled The Economic Impact of the Cloud on UK Business, it makes use of a survey of 1,000 SMBs that have used cloud computing in the UK and US, and shows broadly positive attitudes. 64 per cent said it had reduced IT costs; 59 per cent had been able to reinvest money back into the business; 58 per cent said it removed the need for a dedicated IT team, allowing them to focus on strategy and innovation; and 51 per cent had been able to step up projects such as the deployment of new applications.

In addition, it says that cloud has helped 62 per cent of start-ups in the UK get off the ground, and 45 per cent of SMBs have benefitted from having to buy only what they need through a cloud service.

"The study shows just what an important impact cloud computing is having on UK and US businesses," said Nigel Beighton, International VP of Technology at Rackspace.

"It's particularly interesting that, despite the ongoing economic backdrop, half of businesses on both sides of the pond are actually increasing profits and growing their business through use of the cloud. This includes investing in headcount and wages as well as driving further innovation."

Beighton reinforced the positive outlook at the round table, making the point that the 'pay as you go' model on which many cloud services are available is a big attraction for start-ups. It is also a strong option for companies that want to do something new but pull back quickly if it is not working.

He was supported by Raj Patel, Executive Deputy Chairman of Kashflow, which provides an internet based accounting system for small firms. He said there is growing appreciation that cloud can support new ways of working that provide efficiencies and a competitive advantage.

Enablement, or making a business model more effective, is one of the key features of cloud, Patel said. This is especially so with software-as-a-service, which can provide the real time information which companies can use to add value to their business.

Further support came from Darren Robertson, Digital Communications Officer at the charity Action for Children, who highlighted the potential for data analysis in the cloud. He said that SMBs could make use of this to test a potential return on investment.

Cautious voices

Amidst the positive talk, however, there were voices that, while not dismissing the promise, added notes of caution.

The report says that British business has yet make the most of the opportunity in the cloud, and Dr Brian Nicholson of the Manchester Business School said: "We expected more dramatic benefits to come across.

"We looked for responses to suggest that SMBs were punching above their weight through using the cloud. Some did, but not as many as we expected – about 19 per cent."

He said that concerns about security and where data is kept have not entirely gone away, and plenty of SMBs are unsure about the contracts for cloud services. Suppliers could respond to the latter by providing standard contracts that are more explicit about what it is involved.

Whether this is possible is open to question. Nigel Beighton responded that the law has a strong influence on the detail of contracts, and that Parliament does not move as fast as technology in changing the relevant legislation. This makes it difficult to draw up standard contracts that would fit the bill for everyone.

A lack of understanding is also having an effect. Jonathan Finney, Public Affairs Manager for the Federation of Small Businesses, said very small firms may have heard that the cloud can provide benefits but have no idea how they could use it to their advantage.

"You still need to translate this for the smallest firms," he said. "They often feel they are low tech, and they are asking, 'How do I get there?'"

It all suggested that, while small businesses generally have a positive perception of the cloud, there are still barriers and a gap in understanding how to use the services. Finney told TRPro that it needs people from both sides to become more active in showing what it can do.

"What struck us from the findings was how the big picture reflects that SMBs are innovative and flexible, and want to grow," he said. "People understand how the cloud can help a small business see benefits such as reduced costs and the scope to be innovative.

"But SMBs have to get out there and see what they are missing and providers need to show what this means for SMBs."