SMBs play an important role in the growth of the cloud market

By February 07, 2013
cloud shelf containing web symbols in it

Companies of any size need many of the same things to succeed - web presence, collaboration tools, business apps, etc. Often these products are powerful enough for large companies, but from the cloud they save smaller companies money.

Small and medium businesses are fast becoming a valuable part of the cloud economy. With the cloud, SMBs can access computing, applications and other services as powerful and feature-rich as those that larger enterprises use while still maintaining affordability. A report from Parallels called “Profit from the cloud 2012: Parallels SMB Cloud Insights for the United States,” shows that this market reached $15.1 billion by the end of 2011. Hosted infrastructure makes up $5.9 billion of this market, web presence services contributes $2.7 billion, hosted communication and collaboration (such as premium business e-mail and hosted Private Branch Exchange or PBX) adds $2.2 billion, and business applications (SaaS), $4.3 billion. Parallels announced at the Parallels Summit that the American SMB cloud market had reached $18.9 billion in 2012, and predicts it will grow by 19 percent by 2015.

Not all SMBs adopt cloud tech in the same way

In 2012, approximately 6 million SMBs around the world have entered the cloud market. The high growth potential of SMB adoption manifests as separate usages in 3 groups of companies: Cloud Converters, who currently have in-house infrastructure but are in the process of or planning to use hosted services (e.g. from local servers to remote servers); Cloud Leapers only have basic IT equipment (external hard drives or accounting software) and skip infrastructure in favor of the cloud - or have just started their business and choose the cloud; Cloud Expanders have been using hosted services for some time and could augment or upgrade their current choices. Parallels predicts that within these three categories, the cloud service industry could reach $24.3B in 2014.

Cloud categories are seeing much growth coming from the smallest businesses

SMBs are high adopters of hosted infrastructure - 22 percent of these companies report using such services. Micro-SMBs (businesses with 19 or less employees) are most likely to be Cloud Leapers in this instance, while medium SMBs (100-1000 employees) are more likely to be Cloud Converters. Web presence is more established - in 2011, 70 percent had a website, and 53 percent were hosting it remotely. Most growth is currently from micro-SMBs, a segment that grew 13 percent in 2011, and web presence services spending is up 40 percent for SMBs in general. As for hosted communication and collaboration, 18 percent pay for premium email and 10 percent use hosted PBX. SaaS has a growth rate of 20 percent and a large potential market of the 78 percent of SMBs who use business apps. 

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