As we promised earlier in the week, let’s take another quick look at Microsoft’s SMB Cloud Adoption Study 2011. While the full report has not been made public -- although Microsoft (news, site) promises to do so in the coming weeks -- the finding that 39% of SMBs will be paying for one or more cloud services in three years flies in the face of other recent research that says this just ain’t going to happen.

SMBs, the Cloud

It’s not that research by companies other than Microsoft is any way faulty; it’s just that in terms of cloud computing, most companies -- in both the enterprise and SMB space -- are still jittery about moving to the cloud, and tend to change their minds regularly, with content security one of their major concerns.

There is recent research, for example, from Vitacore Systems that says most SMBs just don’t get cloud computing and that they’re not really sure what the advantages of it are. This, no doubt, is a problem for providers because, according to Parallels, the value of the cloud market in the SMB space is close to US$ 21 billion.

However, Microsoft’s new study seems to indicate that many of the concerns have been put to bed by now and those assurances -- and products -- around cloud security seem to be taking hold. Of course there are also the financial considerations, which are just about certain to act as the main driver.

Another report this week from Spiceworks (news, site) appears to confirm the Microsoft findings and shows that nearly one in three SMBs use cloud services, with cloud usage among SMBs expected to rise to 42%.

In addition, almost one in three SMBs plan to change the way data is stored, moving more data to the cloud, with many planning to reduce their use of local system hard drives and direct-attached storage.

SMB Cloud Adoption

So is there a fundamental change in the way SMBs are going about their cloud business? Microsoft’s SMB Cloud Adoption Study 2011 seems to suggest a gradual, rather than abrupt, change over a period of three years.

The research found that 39% of SMBs expect to be paying for at least one cloud service within three years up from the current level of 29%.

According to Microsoft, this means that, over that period, there will be considerable opportunity for hosting service providers to build their business, especially around the areas of collaboration, data storage, data backup and business class email.

Other findings of the report include:

  • Those SMBs that will be paying for cloud services will pay for 3.3 services within three years as opposed to current levels of fewer than two services.
  • In addition to this, larger SMBs -- those with between 51 to 250 employees -- will pay for even more than that, with 56% paying for 3.7 services.

Cloud adoption will be gradual, and SMBs will continue to operate in a hybrid model with an increasing blend between off-premises and traditional on-premises infrastructure, for the foreseeable future,” said Marco Limena, vice president, Business Channels, Worldwide Communications Sector at Microsoft.


Another trend identified in the report is the role VARs and Systems Integrators (SIs) will play. Andy Burton, CEO, Fasthosts Internet, envisions a situation where VARs and SIs will be able to combine their respective abilities with hosting providers.

As SMBs continue to transition to cloud services, hosting service providers, VARs and SIs will have a major role to play as advisors and providers of IT services in hybrid environments . . .Hosting providers have expertise in selling cloud services while VARs and SIs have experience selling to SMBs," Burton says.

Growth, Profitability

Additionally, the spread of services being sought will be across SMBs that are looking to expand, as well as those that plan to remain the same size, but remain profitable.

Those that are looking to expand are looking for scalable environments that won’t cost a fortune and that can be expanded --  or even retracted -- according to need.

Those that wish to remain the same size will be looking for services with predictable costs that are more cost-effective, and provide efficiency at the same time.

In both scenarios, cloud services will be able to provide tailored services that will keep everyone happy. The research covered 3,258 SMBs with up to 250 employees across 16 countries in the US, Europe, and Asia. More on this as details are released.