Sanjeev Aggarwal's Blog

March 19, 2009

Why are SMBs and Mid-Market Enterprises interested in Cloud Computing?

As SMBs and mid-market enterprises are looking at their IT budget and face the realities to cut them, they look at what is discretionary and what can be supported through innovative IT strategies. However, at the same time they need to adopt new technology solutions that will make them more competitive in the current economic environment and prepares them to grow when the economy improves. They following arguments shed light on why these companies are actively exploring various cloud computing initiatives:

  • Vendors Making it Easy to Adopt Cloud Services – Amazon leads the cloud computing movement because they make it very easy for companies to adopt their platform and storage services with implementation and pricing services that are easy to understand and try without the need for complex contracts and pricing. Vendors that seek to service the SMB market need to learn from the simplicity and flexibility of the Amazon Web Services model.
  • Change in Appetite for Risk – SMB and mid-market companies focus on risk has changed, driven by the realities of the current economic environment. Instead of making do with outdated systems and slowing adoption of new technologies, these companies are now more comfortable with the risks associated with cloud computing solutions. This is driven by examples of success achieved by some of the high-profile companies through “show-me” examples. They are feeling more comfortable with security, access and reliability issues.
  • More Effective Backup and Disaster Recovery SMBs usually do not have remote data centers. Cloud services provide them the ability to encapsulate the internal virtual machines and replicate them to the cloud off-site. Virtualization vendors like VMware and Citrix are making this easier.
  • Shift away from New On-premise Hardware Purchases – As SMBs and mid-market enterprises look at the Key IT initiatives that are being considered in the decision-making processes, initiatives that will help save costs and show quick ROI are getting attention. IT strategies based on flexible monthly operating expenses, without a significant upfront investment is gaining momentum. New hardware purchases and upgrades have a lower priority; business applications that are critical to the business operations are getting approval. However, implementing new business applications sometimes require additional new hardware purchases, the spending on hardware purchases can be alleviated by adopting flexible pay-as-you-use cloud computing solutions and services with business applications which are delivered software-as-a-service (examples NetSuite and Salesforce.com) or hosted in the cloud (example Rackspace).
  • Increase in Adoption of Virtualization – As SMBs and mid-market enterprises adoption of virtualization solutions enters mainstream, adoption of cloud computing solutions is becoming easier.
  • Significantly Reduced Application Implementation Time – SMBs don’t have to go through a two week purchase order process and an additional two weeks of configuration and testing before an application is available for productive use.
  • ISVs Solutions Supporting Cloud Platforms – Majority of the ISVs are now developing solutions that are multi-tenant and built to be delivered over the cloud. Some of them are using cloud platforms like force.com or Quickbase built to support cloud solutions.
  • Savings in Power and Data Center Space – Cloud computing enable SMBs to control server and storage sprawl by moving some of the applications and storage to the cloud vendors data centers, freeing up data center space and at the same time saving on power consumption costs. These SMBs do not want any more hardware in their equipment closets.

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