Cloud grows – slowly – among SMEs

Market research, SME Research

Although cloud uptake by small and medium enterprises (SMEs) remains reasonably slow, the growth in usage is not only steady, but is, in fact, almost exactly as predicted by SME Survey 2012.

According to Arthur Goldstuck, MD of World Wide Worx and principal researcher for SME Survey, the interim results of the 2014 edition indicate that the level of usage today is almost exactly where it was forecast it would be, two years ago.

“In 2012, just 9% of SMEs were using cloud services. Our forecast was that it would rise to 18% by the end of last year. Once you add another four months to this – taking us to the point the interim results were analysed – and the forecast should have reached about 21%. The number revealed by the survey is in fact 22%,” he says.

“Clearly, we are delighted not only that our research has proved to be sound, but also that SMEs remain on track for steady growth, even if it is not going to transform the market suddenly or dramatically.”

Sound research has been a hallmark of SME Survey since it first began in 2003. Today, it is the largest representative survey of SMEs in South Africa and has contributed ground-breaking insight around the forces shaping SME competitiveness.

Ironically, adds Goldstuck, those SMEs that choose not to embrace the cloud give virtually the same reasons as those large enterprises that avoid it, namely that they don’t see the benefit; they don’t understand it; and they are nervous about it. This nervousness stems both from the fear of failure and the fear of the unknown.

It is important that cloud providers understand the reasons behind certain SMEs unwillingness to embrace the cloud, says small and mid-size business Director at Microsoft South Africa, Tracey Newman.

“Now that the issues above have been highlighted and clarified, it becomes that much easier for organisations like ours to take the steps necessary to address these quite understandable fears that SMEs have with regard to the cloud.”

Goldstuck suggests that the Survey has already highlighted some of the most important incentives that would make the cloud a more attractive proposition.

“The single most important incentive for SMEs is having a guarantee of 24/7 real-time support, with more than a third of respondents (36%) citing this. That is actually more than double the next most critical factors, which were recommendations from other users (16%), a localised provider (15%), and price (15%). All else being equal, price will certainly play a major role, but it is interesting to note that it is not even one of the first three things on the minds of SME decision-makers,” he says.

The current level of uptake indicates that SMEs on the whole are still reluctant to wholly embrace the cloud, he adds, pointing out that he feels this is actually a challenge to vendors, rather than SMEs themselves.

According to Charles Lalieu at Business Connexion, SME Survey has re-emphasised the challenges that small business, in-fact all businesses, face when selecting the correct cloud solution.

“This research confirms Business Connexion’s approach to providing core IT cloud services for all South African business from our local, highly available datacentres that are running ICT services for South Africa’s largest enterprise business 24/7 globally. We have embraced the findings and will continue to simplify our innovative programmes for all businesses to procure through their trusted channel, while clearly communicating the value proposition by addressing their business requirements.”

“While this is a challenge to cloud providers and demonstrates the importance of better communication with potential customers, it is equally an opportunity that an organisation like ours will relish tackling.”

Goldstuck is quick to point out that over the years SME Survey has repeatedly confirmed that SME decision-makers will not invest in a technology if the benefits and value proposition are unclear.

“While a part of the reason for slow uptake may be attributed to many SMEs being less sophisticated in their use of technology, the industry has certainly not taken to heart the message it sends to this sector. Hopefully, the results of SME Survey 2014 will play a role in helping to change its approach towards SMEs in highlighting the genuine benefits cloud offers,” he concludes.

SME Survey 2014 is sponsored by the Small Enterprise Development Agency (Seda), Business Connexion and Microsoft.

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