Home Opinions SMEs are not interested in cloud technology!

SMEs are not interested in cloud technology!

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After drinking what must be thousands of lattes, meeting a similar quantity of end user ‘consumers’ (potential and actual), and then hundreds of cloud computing vendors, I want to share some of my thoughts with you and I hope these do not come across too much as a soapbox rant.

“Cloud” is a word that’s so over-used, over-sold and yet underestimated.  Those of us within the cloud industry seem to assume that the end consumer of this technology actually understands what we are talking about. We talk about what the greatest trends in cloud are and ‘prophesise’ on where they are going to end up, without – to coin a phrase – eating our own dog food.[pullquote]Those of us within the cloud industry seem to assume that the end consumer of this technology actually understands what we are talking about. [/pullquote]

We can talk about IaaS, PaaS, SaaS and who is doing what, we can debate whether Openstack will start to be adopted in the masses, we can even pontificate over what strategy should be employed in order to gain market share in the hybrid cloud race. But what does this all mean to the end consumer of these services?

At the tech-driven vendor side of the business, we like to talk about technology. We like to see the latest advancements in cloud tech and see the value of them. We are at Cloud version 3.0 (I just made this version up by the way) and our clients’ understanding is still at Cloud version 1.0. See the problem? …And in the SME market space the gap is only getting wider.

So, let’s look in depth at the SME market place (Small and Medium size enterprises). Below are some statistics from the Federation of Small Businesses (updated as of Oct 2013).

At the start of 2013:[pullquote]We are at Cloud version 3.0… and our clients’ understanding is still at Cloud version 1.0. See the problem? [/pullquote]

  • There were an estimated 4.9 million businesses in the UK which employed 24.3 million people, and had a combined turnover of £3,300 billion
  • SMEs accounted for 99.9 per cent of all private sector businesses in the UK, 59.3 per cent of private sector employment and 48.1 per cent of private sector turnover
  • SMEs employed 14.4 million people and had a combined turnover of £1,600 billion
  • Small businesses alone accounted for 47 per cent of private sector employment and 33.1 per cent of turnover
  • There were 891,000 businesses operating in the construction sector – nearly a fifth of all businesses
  • In the financial and insurance sector, only 27.5 per cent of employment was in SMEs. However, in the agriculture, forestry and fishing sector virtually all employment (95.4 per cent) was in SMEs
  • Only 22.5 per cent of private sector turnover was in the arts, entertainment and recreation activities, while 92.7 per cent was in the agriculture, forestry and fishing sector
  • With 841,000 private sector business, London had more firms than any other region in the UK. The south east had the second largest number of businesses with 791,000. Together these regions account for almost a third of all firms

Micro: 0-9 employees, Small: 10-49 employees, Medium: 50-249 employees

So the SME market place accounts for £1,600 billion revenue in the UK

(what a market!)

The SME understanding of Cloud.

[pullquote]…it will be in the skewed in favour of whoever has the largest marketing campaigns running at the time, or is the cool company of the moment.[/pullquote]So what do you think is the typical SME’s level of understanding of Cloud technologies?  Well, I can tell you that it certainly won’t be the same as yours and mine! It will be based on word of mouth from colleagues, it will be what they have read on and offline – and to be honest, it will be in the skewed in favour of whoever has the largest marketing campaigns running at the time, or is the cool company of the moment.  When one of us (cloud vendors) gets asked a direct question about cloud by an SME, we tend to over-complicate and miss-communicate the reply, which only serves to leave them in a confused state (yes we do, no arguement!).

Does this slow the adoption to Cloud based services? You bet – and in a big way!  If you – as a vendor – want to win your prospective clients over, you need to educate them from their understanding of cloud version 1.0 to version 3.0 and the reasons why it matters to them.  Don’t let them be won over by a smooth talking sales campaign that promises everything and under-delivers once they have agreed a contract, as this is very rife in the Cloud industry today.

[pullquote]If you… want to win your prospective clients over, you need to educate them from their understanding of cloud version 1.0 to version 3.0 and the reasons why it matters to them.[/pullquote]In my opinion, there are no more product-based sales approaches within Cloud… there simply just cannot be. With ‘cloud’ meaning so many things to so many different businesses, it will be over-sold and under delivered. Hence we are now talking about SLAs, termination clauses and everything that needs to be considered when being approached by a cloud technology vendor or service provider, if it all goes wrong – prior to signing up (which is not a bad thing to do by the way).

As cloud technologists / evangelists, we have a duty to our clients… a duty that requires us to understand why anyone would buy our products, and have the integrity to say when they are not suitable for purpose. If we work in partnership and educate our clients along the journey to a successful cloud adoption, then we will retain them for the future and trust will be formed. The cloud marketplace is a relatively young industry and there are many choices a consumer can make, so let’s help ensure they make the right one.

For the end consumer

Cloud technologies are changing business in every industry at such an alarming rate.  New applications and services born from the cloud are appearing daily and major technology upheaval is becoming nearly constant. How do you keep up? How do you know what to change, where should you outsource your technology and why?

There are so many questions an SME could ask and they are  right to ask, but let’s examine one common question in particular as it is quite revealing…

Q. Must I have a Cloud provider that has flexible contract lengths, as the technology changes so rapidly?

A. Yes and No…

Yes – There are commodity cloud services (i.e cloud data backup, email services) that have been commoditised and are based around simple application services that have been employed for years. Data is data and once a cloud based system has your data, it can be transported quite literately anywhere and at anytime. So in this instance you could say ‘yes’, a short term flexible contract/agreement could be sensible.

No – If your business depends on specific knowledge or understanding of the technology you use, or if your business relies on specific/bespoke applications that require more than a template approach of support – then no. Why would you change this for a short term agreement with a firm that may tell you they understand your specific requirements but in reality they don’t?[pullquote]Cloud technology will not fit all, so a hybrid approach is frequently needed[/pullquote]

A point to note for business consumers of cloud services – a short term contract/agreement isn’t predictable revenue and that is the same for any business. If you had monthly contracts to all of your clients, would that make you less comfortable with growing your business, or indeed would your clients want monthly agreements?

What I am alluding to is an analogy that both the SME business and the cloud vendor can both understand.

Cloud technology will not fit all, so a hybrid approach is frequently needed. Just as the technologist out there will understand that hybrid clouds are coming of age with the choice of infrastructure and location, the business consumers know that hybrid cloud support is also needed to help them through the transition and beyond. And let’s face it, they are quite literately running blind in so much that all of their technology and systems are now being supported and run by someone else.

[pullquote]This may seem like an anti-cloud based rant but it’s actually quite the opposite…[/pullquote]There can never be any replacement for local knowledge and understanding for any given business, so why should IT be any different? For the majority of IT services I totally agree with moving to cloud-based computing, without any doubt, but if we do not see this challenge for adoption now we will be in a terrible state of affairs in the very near future. We will all be on hold to call centres, being read scripted questions and ultimately be asked have you turned it off and on again whilst all you want to do is talk to someone that understands why you have at least called.

This may seem like an anti-cloud based rant but it’s actually quite the opposite. Cloud technology will only ever get faster, cheaper, more flexible until there will be no other choice but to use it.  However we need to keep an eye on the actual consumers that are buying this technology and the reasons why – we must not lose sight of this.  Do you concur?