A Timeline of Cloud-Based Opportunity for SMBs
The proportionately smaller IT budgets of small and midsized businesses (SMBs) – as compared to their larger counterparts – long have presented challenges in terms of accessing IT expertise, support, and cutting-edge hardware and software.
Trends including a growing mobile workforce and BYOD, along with an increasing threat landscape put SMBs at further disadvantage with their limited ability to upgrade IT infrastructures or implement newer technologies to support those trends.
Enter: The cloud.
Cloud computing enables IT infrastructure and applications to be delivered over the Internet as a service. For SMBs in particular, the draw of cloud services begins with their cost-practicality – which can reduce IT costs by more than 35%.1 Cloud services provide a reliable and scalable delivery alternative that opens up valuable and game-changing benefits and capabilities without the capital investment or resource commitments of a traditional on-premises IT environment.
On the downside, questions of security, lack of IT control, data ownership, and compliance have been common derailers on the track to cloud adoption. Today, these issues are waning in the face of more mature cloud offerings, trusted and established cloud vendors, and a constant growth and increasing availability of cloud services.
SMBs were among some of the early cloud adopters. Today, they continue to lead the charge thanks to the growing list of cloud-based offerings and the specific benefits that hold such value for this particular group.
Let’s take a closer look at the overall cloud timeline – along with SMB adoption of this delivery model as a viable alternative to on-premises offerings.
Clouds on the Horizon
Clouds began to form over the technology landscape as early as the 1960s. Computer scientist J.C.R. Licklider’s vision of an interconnected global population that could access programs and data anywhere, from any site – and his initial involvement – spurred the development of the Advanced Research Projects Agency Network (ARPANET), the predecessor to and technical foundation of today’s Internet.
The World Wide Web was introduced in 1993. Internet access at that time was limited to 56 kbps modems that were connected by phone lines – a painfully slow speed by today’s standards. A single song (3.5MB) took around 10 minutes to load.2 The introduction of broadband in 1996 increased connection speeds and bandwidth significantly, creating perfect conditions for cloud computing to gain momentum.
In his talk at an INFORMS meeting in Dallas in 1997, Professor Ramnath Chellappa was the first to refer to the term cloud computing, suggesting a “computing paradigm where the boundaries of computing will be determined by economic rationale rather than technical limits alone.”3
A Gathering Storm
Several events followed that signified major steps toward widespread adoption of cloud computing:4
- 1999: com pioneered the concept of delivering applications to end users over the Internet.
- 2002: Amazon Web Services provided users access to storage and computation solutions.
- 2006: Amazon launched the first commercial cloud – the Elastic Computer Cloud (EC2)
- 2008: Google introduced radical pricing models with free-entry-level plans and low cost computing and storage services with its Google App.
- 2010: Software giant Microsoft entered the cloud market with Azure, which supports streamlined development of web and mobile apps (to support a rapidly growing mobile industry)
Certainly, with big technology players entering the market in the first decade of the new century, the cloud was gaining attention as a force to be reckoned with – or at least to be acknowledged.
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SMB Adoption Trends
In 2009, a CIO.com article revealed the newness of the cloud computing paradigm, asking IT professionals such rhetorical questions as, “Are you ready?” and “What are smart companies doing now?”5
By 2012, Spiceworks noted a significant 71% increase over the previous year in cloud adoption for SMBs, with file sharing (52%) and hosted email (42%) two of the top services used.6
A 2015 cloud adoption trends survey7 indicated that nearly 90% of SMBs were using the cloud – with hosted email (79%), web hosting (82%), and backup/recovery (60%) the top uses for the cloud. Other findings:
- The cloud itself had evolved from an early public model to hybrid combinations of cloud hosting, dedicated hardware, and software tools.
- Small companies (< 20 employees) were leading cloud adoption (68%); midsized businesses followed with 53% adoption.
- Benefits of the cloud for SMBs included reduced IT management time (51%), fewer required resources (50%), improved service availability (75%), and less worry about outages (96%).
- Surprisingly, security nearly topped the benefits list at 94%. Once a concern, cloud security had shifted to a cloud advantage as SMBs recognized that providers were more proactive in implementing new defenses than they would be in their own on-premises IT environments.
Clouds in the Forecast
According to Spiceworks’ 2016 State of IT report,8 the trend toward cloud adoption isn’t slowing down, and in fact, new variations of cloud-based services are slated for high-growth. A slightly-higher-than-last-year 14% of IT budgets is slated for hosted and cloud-based projects this year.
With the global cloud computing services market anticipated to reach $127 billion by 2017,1 SMB cloud adoption is expected to remain strong. And with the increasing variety of available offerings poised to meet SMB needs, the cloud is a viable – and popular – way for SMBs to remain competitive in today’s constantly shifting market and technology landscapes.
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