“There is no such thing as an SMB market. It does not exist.”
At the Parallels Summit 2013 in Las Vegas this week, Tim Harmon, principal analyst at Forrester Research, proclaimed this during his keynote.
He was referring to the fact that the SMB market is an incredibly diverse pastiche of niche markets comprised of 250 million SMBs around the world.
Behind the diversity, though, is a market lurking with tons of potential, especially for cloud. And this is the year that cloud is likely to power ahead significantly.
Based on Forrester’s research, businesses have increased sourcing services from the cloud, be it very small businesses (less than 10 employees), SMEs or enterprises. Across the board, companies have indicated an increase in using cloud services from roughly 10 to 20 percent from 2011 to 2012, with the biggest increase in the very small business segment.
Parallel estimate that the SMB cloud market is expected to roughly double in size from 2012 (US$45 billion) to 2015 (estimated to be US$95 billion).
Here are five interesting key trends for the cloud SMB market:
Disaster recovery and business continuity is huge. According to Forrester’s research, one of the biggest cloud market potnetial segments for SMBs in 2013 is DR/BC, as SMBs rated this as one of their top tech priorities this year.
Go software-as-a-service. According to Tim, their research has shown that SMBs favour SaaS, rather than PaaS or IaaS, because it comes in a “pre-packaged form”.
Business intelligence is worth keeping an eye on. The top SaaS tools that SMBs are looking at are CRM and collaboration software. However, in the last four years, interest in BI and decision support tools have increased from “almost nothing” to about 10 percent, said Tim.
Cost is not everything. Whilst cost is still an important factor, business agility and the ability to focus on the core business came out tops in the research. The move from a CAPEX to OPEX model – a typical selling point for cloud services – is a message that enterprises are more likely to respond to rather than SMBs, said Tim.
The SMB cloud market is a blender. In the cloud market you have IaaS providers, hosting companies, telecom operators, traditional system/service vendors, system integrators and outsourcing companies. As players in the market jostle for dominance, they will all bleed into one another, and sometimes it will be hard to tell who does what.
A tale of three companies
The cloud space will definitely be interesting to watch as different companies try different strategies to attack the space.
At the Parallels Summit itself I met three very different companies, each with their own distinct path to success in the cloud.
On the service provider end, I met Australia’s iiNet, the third largest telco over there. Large enough to be listed but yet small enough to be nimbler than Telstra (number one) and Optus (number two), the plan of attack is to build cloud services, bundle it with their mobile and broadband offerings and then go to war to win market share from one and two.
On a far smaller scale is Tsukaeru.net, a Japanese hosting company turned cloud services disruptor.
Founded and run by Aussie Jason Frisch in Japan, the idea is to continually innovate. A Parallels-only shop with a company size of 30 employees, the plan is to bring in niche cloud services from around the world and then localize it to Japan (Tsukaeru.net’s clientele is 95 percent Japanese).
When the bigger players adopt and copy his services, Jason moves on to new areas of growth, always keeping his company nimble and small.
The last company I met was Datacom, a New Zealand-based system integrator/datacentre services provider who is looking to evolve to the cloud. Pathways to grow include looking at industry niches like government and pharmaceuticals within New Zealand (their traditional strengths built up from years of being a SI), and also building custom cloud apps for enterprise customers.
All three companies come from different backgrounds and skills, yet all are attacking the SMB cloud market in their own way. The future for cloud is certainly going to be interesting.
