SMEs cautioned against cloud

Despite the hype in the media, cloud computing will not be high on the local SME radar this year, argues Space Age Technologies’ marketing director, Chris Welham.

February 10, 2011

IT publications and even the technology pages in mainstream media are awash with articles on cloud computing and how it will change the way companies communicate and do business.

The fact is that, while we believe cloud computing is on the information radar of SMEs in South Africa, we will not see the massive uptake of cloud computing predicted by providers at least until 2012. To paraphrase U2’s Bono: There’s been a lot of talk about cloud computing. Maybe too much talk.

Communication remains a core business function and companies are looking for the lowest risk path available to them. A move to cloud computing means business continuity is dependent upon a reliable Internet connection. This, and concerns about security of data in the cloud are more likely to cause SMEs to remain cautious through 2011.

To compound this, many service providers’ business models depend on physical infrastructure. They make money on the hardware, the software and the support and so it is naturally in their interest to keep services onsite.

Many of Space Age Technologies’ clients are already using some cloud services such as hosted exchange and are seeing the benefits of this. However, until the big providers such as Microsoft, Amazon or Google have direct presence in the country, or at least international bandwidth becomes less constrained and more robust, companies will continue to approach cloud services with caution.

Low hanging fruit such as hosted exchange could be a way to prove the mettle of cloud services. Offsite e-mail archiving and online backups are also good ways for smaller companies to become more comfortable with the robustness of the cloud. Businesses are taking advantage of pay-as-you-go models as well as the scalability and flexibility of offerings and this will be the biggest incentive to drive them to faster adoption.

In contrast, consumerisation of IT will be a key motivator for smaller companies over the next year and a half. The iPad and smartphones have made a truly mobile workforce a reality, allowing a greater work / life balance. We believe that this phenomenon will see small business owners become excited about IT and how it can transform businesses. As consumers we are becoming more comfortable with IT and this will mean less resistance to and fear of IT in general.

Will this, however, result in small business owners rushing to sign up for Software as a Service offerings when it comes to integral functions like accounting and ERP functions? Not for the next year certainly.

The tipping point for the SME market will come when the enterprise truly embraces the public cloud. And, more importantly, when their suppliers (often SMEs) are forced into migrating to meet their enterprise client’s requirements. For now though, we are recommending a phased approach, which will allow a measure of comfort in the cloud offering rather than the big bang approach.