SMBs: Here's What's Ahead for Cloud Computing in 2016 and Beyond

In just a few short years, cloud computing has revolutionized the way in which businesses access their data and applications, and has quickly become an essential part of many businesses. Moving to the cloud has already helped thousands of SMBs collaborate better, spend more predictably, work more flexibly and scale efficiently.

However, the rapid evolution of the cloud and the proliferation of related technologies has also led to much confusion. With limited time and resources, it’s no small challenge for small and medium-sized businesses to keep up with technology and its best practices for their business. Yet, not doing so risks leaving money on the table and ceding significant strategic opportunities to rivals.

With less than two months until the beginning of 2016, we’ve pinpointed four trends in cloud computing that SMBs must know about. By staying abreast of the latest developments and understanding how they impact your business, you will be better able to shape your cloud strategy.

SMBs reduce reliance on on-premises technology.

The cost of replacing, upgrading and managing on-premises hardware means that 2016 will see more SMBs switch from physical infrastructure to IaaS (Infrastructure as a Service). Cloud infrastructure allows businesses to benefit from a predictable, monthly IT spend as well as reduce the amount of time and resources spent maintaining and supporting legacy hardware and software.

The U.S. IaaS market grew 12% from $8.4 billion in 2014 to $9.4 billion in 2015, according to Odin’s 2015 SMB Cloud Insights report.1 Findings from the Odin study show that — for the first time  the percentage of US SMBs with cloud hosted servers was evenly split with those that have in-house servers only, as opposed to previous years when in-house server percentage dominated. The same study projects that the IaaS market will continue to grow in 2016 and reach $11.8 billion in 2018.

Scaled solutions such as Microsoft Azure further increase cloud uptake among SMBs.

The U.S. SMB cloud storage market is predicted to grow from $43 billion to $55 billion in 2016.2 The ongoing growth in cloud uptake in SMBs is being enabled by the increasing availability of scalable cloud platforms such as Microsoft Azure. In June of 2015, Azure was named a leader in Gartner’s Public Cloud Storage Services Magic Quadrant, second to Amazon’s AWS. However, Azure is the only major cloud platform that is consistently ranked as a leader in IaaS and platform-as-a-service (PaaS) further contributing to Microsoft’s ranking with the fastest growing revenue growth among the top 5 cloud providers.3

Azure allows SMBs to tailor their hosting according to their requirements, scaling their solution to meet demands. Coupled with its enterprise-level security and seamless integration with the Microsoft ecosystem, Azure is gaining quick ground as the cloud platform of choice for businesses looking ahead to smart growth.

Increase in popularity of hybrid cloud business models.

Recently the number of hybrid deployments has increased, and this trend is expected to continue into 2016 and beyond. The hybrid cloud model is often described as a combination of a private/on-premise and public cloud services. But the other “hybrid cloud” is a combination of a cloud service(s) and traditional IT infrastructure. Both models can offer the best of both worlds for organizations that have the budget and circumstances to suit. Perhaps the most common that we see is the integration of Software-as-a-Service (SaaS) solutions with an existing mix of on-premises environments.

As SaaS solutions like Office 365 continue to increase in popularity within the SMB market, we'll see more and more businesses easing into a hybrid cloud environment. Mass.-based IT research firm IDC had predicted that 30% of all U.S. small businesses would have adopted Office 365 by the end of 2015.4 A study conducted by the BetterCloudBlog this year discovered 51% of SMBs using Office 365 were functioning in a hybrid environment.5  For many growing businesses whose employees are comfortable within the Microsoft Office environment, the switch to the cloud version has proved to be a welcomed change that improves productivity, collaboration and mobility. It makes sense that sales for cloud-based productivity suites like Office 365 and the likes are projected to reach $5.9 billion in 2016,6 and the SMB market will continue to contribute to much of this growth.

Evolving role of MSPs as Cloud Managers

The variety and sophistication of cloud options available to SMBs grows more vast by the day as vendors look to grab their piece of the pie. The speed of development means that many businesses do not have time to stay on top of the latest advances or the opportunities to utilize them. That’s where the Managed Services Provider (MSP) can come in.

As Microsoft’s James Staten points out, “the future of the MSP is in managing the blended IT environment.” As businesses IT landscape becomes more mixed and intertwined, businesses will not be expected to master the mix of in-house, hosted, SAAS and multiple cloud platforms.

“Looking at your task list and cross-correlating this with your IT staff bandwidth,” Staten says, “you’ll likely draw the conclusion that managing the Cloud Handshake falls low on the priority list. And this is exactly where the MSP can add the most value. And exactly where their business models are evolving.”

It is going to be increasingly common for SMBs to look to MSPs, or trusted advisors, with proven cloud experience to help them select the best cloud mix and migration path for their business. These cloud specialists will monitor changes in cloud technology for their clients, help them select the best possible package for their business, and provide specialist support during the upgrade process.

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Sources: 1. Odin 2015 SMB Cloud Insights  2. Financial Post   3. Information Management  4. Carbonite  5. Better Cloud Blog 6. Radicati Group