SMEs value agility over cost-cutting in the cloud

Last Monday, we brought up the cloud’s appeal to small businesses for the scalability and flexibility it provides. While cost efficiency is a natural concern for decision-makers, new research from Techaisle shows that SMEs are less focused on cost-cutting than in previous years. Instead, businesses are more focused on the opportunity to reach new markets and customers and developing new capabilities. Increased interest in business agility and performance doesn’t mean companies are ignoring budgets—process costs remain a top concern, especially among mid-market businesses with 100–999 employees.

We’ll be digging deeper into companies’ motivations for migrating to the cloud, as well as the related challenges, in our survey and series of executive interviews—stay tuned for results.

Analyzing our cloud survey data

After we close our survey of 350 business and technology executives, we’ll segment responses by industry, company size, region, profitability, and other parameters, and then analyze the data to identify broad trends and connections as well as key variations between and among categories. This will allow us to understand cloud migration strategies for companies from around the United States, approaches to security across industries, and the wants and needs of executives who are looking for cloud and managed services providers.

Next, we’ll take this data, along with insights gained from eight executive interviews, and use it as the basis of our briefing paper, think pieces, and infographics.

Our first paper will focus on high-level findings of the research and include in-depth interviews with executives, charts and tables that illustrate the key points of the research, and calls to action to help plan future strategies. Following the release of this briefing paper, we’ll write four shorter think pieces—each with a particular focus determined by trends revealed by the survey analysis, highlighting the ways companies are transitioning to the cloud, and finding and measuring value there.

Look for our briefing paper at the end of May, and think pieces throughout the summer. In the meantime, we’ll be showing you some of our survey results and sharing our progress right here on the blog.

SMEs and cloud migration

When you stop to think about it, the most enthusiastic adopters of cloud computing and the easiest companies to sell it to should be small and medium-sized enterprises.

We agree with this analysis by Ireland-based technology journalist Billy MacInnes: The cloud should be especially appealing to SMEs. “Larger organisations have substantial legacy infrastructure and bespoke systems they are unwilling or unable to quickly move into the cloud, but many smaller organisations have no such entrenched, complex IT to protect and preserve. By rights, they should be far more open to the concept of cloud computing.”

And once these companies have made successful early forays into the cloud, they can use it to support other key technologies, including mobile and analytics, in a scalable and affordable fashion.

But as we saw in a recent global research project on SMEs, many smaller firms are slower to adopt cloud computing than one might expect. A couple big hurdles: Lack of understanding of the benefits, and trouble determining ROI.  Meanwhile, willingness to relinquish control of IT systems turns out to be a minor issue.

Note that the earlier research was global in scope and focused on a broader set of issues than the current, US-oriented program we are chronicling here. Still, it sets up some of the key questions we’ll be pursuing over the next few months.

Cloud news roundup

Some stories of interest from around the web:

  • According to a recent Gartner survey, 70% of CIOs expect to change technology and sourcing relationships in the next three years, largely because of dissatisfaction with their current providers’ ability to adapt to change. “Market share will shift to service providers able to help clients respond to the business and IT opportunities and challenges that are overwhelming more than half of organizations today, says Gartner managing vice president Eric Rocco. “Service providers need to convert this picture into an opportunity rather than a threat.”
  • Lukewarm reaction to its earnings report fails to deter Oracle optimism about its cloud business. The software giant plans to expand public, private, and hybrid cloud models; Oracle says it also will make it easier for customers to purchase, onboard, and make use of their software.
  • Five common cloud myths preventing healthcare deployment, concerning security, cost, functionality, ownership, and opportunity.

Survey launch countdown

We’re very close to finalizing our survey document, after which we’ll code it, test it, and launch it into the field. A few weeks later, we’ll have the results from 350 c-level execs and direct reports at companies across the United States.

Our goal is to bring back meaningful, statistically-relevant data about the ways companies of various sizes in diverse industries are approaching the cloud — where they are in the process, what their strategic thinking is, what keeps them up at night.

We’ll also conduct a series of interviews with executives to add perspective and color to the survey data.

When that’s all done, we’ll produce a series of short papers and infographics that present our findings and delve into relevant themes suggested by the research. And throughout it all, we’ll be updating you with progress and results at this site.

Scary stories

12 months ago, before we launched our Cloud Computing strategy we were on the top of our game. Now we are fighting for survival.

There are so many questions, with hindsight, we wish we’d asked.

Not about your cloud journeyThe journey into the cloud can sound like something out of Cormac McCarthy’s The Road (“Nothing moves in the ravaged landscape save the ash on the wind…”) but seasoned travelers aren’t arguing against making the trip — just for taking a disciplined, clear-eyed approach to migration.

Which is pretty much our position, too, and the point of our research.

The consequences of taking a shortcut are not pretty:

Execution was clearly the issue. The strategy was correct but our implementation was a disaster as new issues kept surprising us. We underestimated how this new offering would confuse customers. We thought they understood cloud computing. But it simply stalled sales. They assumed they needed less consulting support and projects started to fail.  The help desk was swamped and customer satisfaction scores went through the floor.

But the worst was the sales cannibalization and changing salesmen’s compensation to be tied into our annuity model. And that, it seems, was the last straw for our salespeople. If they can’t make money, they will go somewhere where they can.

Again, we’re not trying to talk you out of entering the cloud. Far from it. We just want you to do it right.

Don’t believe (all of) the hype

This column from The Guardian takes the same practical approach to the cloud we were talking about the other day: “Just as an end-user doesn’t care about what model of server is hosting their business’ IT, cloud is simply a means towards a business outcome.”

At the same time, the piece argues for a broad, strategic view of what those business outcomes might be, and emphasizes the need to understand cloud offerings in the particular context of one’s own organization.

All themes we’ll be building on in the weeks and months ahead.

What are we talking about?

“The cloud” has become a catch-all phrase for “computing that happens somewhere else.” Which is fine for certain audiences.

Here, though, we plan to be more specific.

Our definition includes Infrastructure-as-a-Service (IaaS), the machines and code that make the cloud work; Platform-as-a-Service (PaaS), the realm of development and deployment; and Software-as-a-Service (SaaS), which primarily serves end users.

Our focus is on the path to business value in the cloud, across all its levels, with a concentration on that all-important base of IaaS. 

Mapping the path to value

bookcoverNicholas Carr brought the concept of cloud computing to mainstream audiences back in 2008 with his book, The Big Switch: Rewiring the World, from Edison to Google. It might seem an unlikely topic for a bestseller, but Carr had an epic story to tell: Computing power, like electrical power a century earlier, was becoming a utility, and the combination of industrial-age history and digital futurism made for a compelling read.

Yet for all the excitement, Carr’s argument for mass migration into the cloud was a practical one. As he said at the time, “Ultimately, corporate decisions are economic decisions—and the advantages of utility computing are going to push companies in that direction.”

Six years on, the cloud has matured rapidly. It’s so commonplace for consumer applications that we hardly think of it anymore. Companies are changing not just the way they use and pay for hardware and software, but their entire approach to business; in some industries, cloud strategy is a survival-level issue.

And still those practical, economic considerations matter most. For many companies, it starts with a couple of basic questions: How best to move into the cloud, and how to measure the results?

Those questions are the subject of this blog and the research program behind it. In the months ahead we’ll look at the journey and the payoff along the path to value in the cloud. We’ll share results from our survey of 350 executives and excerpts from our series of exclusive interviews with corporate decision-makers, analyze news and break down trends, and publish expert opinion and insight – including yours, if you wish to join in.

Look for us on Twitter and LinkedIn, too.