Sharpening the Small Business Competitive Edge. Is the Time Right for the Cloud?

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1 Sharpening the Small Business Competitive Edge An IDC InfoBrief, sponsored by SAP October 2014

2 Sharpening the Small Business Competitive Edge Contents» W hat do we mean by Cloud?» C loud and Mobility are driving IT spending growth in small and midsize businesses» C loud engagements work for big firms but where are they working for small ones?» A ttitudes towards Cloud are changing, and adoption is growing despite some security worries» C ost savings and flexibility continue to encourage Cloud use (Cloud users are more likely to post revenue growth of 10%+!)» E ssential Guidance Home pg 2

3 What is the Difference Between Cloud and On-Premise Software? Traditional Applications, Data, and Resources On Site Applications and Data Accessed via the Internet On Premise Combination of Both (Most common approach) Cloud Not sure about Cloud vs. On-premise? TWO KEY DIFFERENCES: 1. How you access. In on-premise deployment, applications, data, and servers are all on site at a company s physical location. In cloud deployment, the physical servers and applications are in a datacenter hosted by a third party with access provided through an Internet connection. 2. How you pay Subscription vs capital equipment; Up-front investment v. on-going cost. pg 3

4 Cloud and Mobility Will Drive IT Spending Growth for Small and Midsize Businesses Are You On Board? In the U.S. the largest share of IT growth between 2013 and 2020 will be from the transition to mobile and cloud resources. The combined benefits of Cloud and Mobility will enhance productivity and improve business efficiency. No wonder IDC expects almost half of SMB IT spending increases to be associated with Cloud or Mobility investment. Faster US SMB Dollar Spend Growth in Mobile and Cloud Compared to Rest of IT $38 Billion $982 Billion 5 Year Incremental 6 Year Total ($ ($7B-$8 Billion Spending Billion Per Year) Increase Per Year) 28% Cloud + Mobile Spending The Rest of IT 43% Cloud + Mobile Spending The Rest of IT SMB Cumulative Totals Total Growth pg 4

5 Bigger Companies Have Moved to the Cloud in a Big Way Time for a closer look? 81% 51% 81% of US companies with 100+ employees currently use the Cloud % of Global 2000 will have half of all IT in the Cloud 51% of IT budgets will be devoted to Cloud projects/ services by 2016 $43B US Businesses will spend $43 billion on Cloud-based solutions in 2016 pg 5

6 Cloud Adoption Gaining Everywhere Global Small Business Cloud Adoption Rate by Key Country, % 18% 16% 12% 32% 22% 28% US UK Germany Japan India China Brazil Note: Includes SaaS and also Online Storage Source: Regional 2014 SMB Cloud Adoption Survey: Making the Case for Hybrid Cloud (IDC #246358, January 2014) pg 6

7 Cloud Use is Growing, Despite Security Concerns Why Are More Small Businesses Moving to the Cloud? 100% 80% 60% 40% 20% 0% 50% HAVE SECURITY CONCERNS 3.2% 6.9% Use SaaS/Cloud Applications 9.4% 11.2% 17.0% Concern About Security Discouraging Cloud Use 20% 15% 10% 5% 0% AND 15.9% PLAN TO ADD CLOUD SERVICES IN 2014! Why are more Small Businesses Moving to Cloud?» Increasing familiarity with online resources» Recognition of risks in on-premise solutions especially for storage and data protection» Improvement in Cloud security solutions pg 7

8 Top Five Reasons Driving Cloud Adoption in Small Businesses Factors Encouraging Cloud Computing Adoption (Share of US SBs Citing) Pay for capabilities as needed Ability to add new users without difficulty Add Cloud resources easily to current IT environment Remote management / coordination that eases IT staff workload Ability to bring capabilities in- house if needed 41.3% 29.1% 28.2% 27.6% 22.1% Cost Efficiency and Productivity Gains Drive Cloud Interest Source: IDC s US SMB Survey 2013 pg 8

9 Small Businesses that Use the Cloud are More Likely to Show Higher Revenue Percentage of Small Businesses with Annual Revenue Growth of 10%+ There is a clear association between Cloud use and revenue growth. In fact, small businesses using the Cloud are 1.7 times more likely to have 10%+ 37.3% revenue growth than small businesses in general. 22.6% 28.3% 13.0% Total Small Businesses Small Businesses with Cloud Small Businesses Plan Cloud Small Businesses No Cloud Interest Source: IDC SMB Survey 2013 pg 9

10 Where to Start with the Cloud The Big Four are a good place to start» » Web hosting» Storage» Sales/CRM automation Three Steps to Cloud Engagement 1 Begin with the Big Four 2 Add on more advanced capabilities As your comfort increases, add advanced capabilities:» ERP and business management» Groupware and collaboration 3 Realize the full potential of the Cloud combine with mobile capabilities Add cloud resources as needed, a natural transition to new capabilities, not a disruptive shift. Cloud resources can be especially effective when combined with mobile capabilities, providing remote workers with access to the latest applications and resources. pg 10

11 Sharpening the Small Business Competitive Edge Essential Guidance» Cloud resources are associated with higher levels of performance, so are certainly worth a closer look.» Access to resources without requiring a major upfront investment is at the heart of Cloud appeal. The ideal is for performance improvements to pay for monthly costs.» As you consider using the Cloud in your business, think about storage and as natural places to start. Additional capabilities, such as accounting, customer management and other apps can help sharpen business practices as your comfort with Cloud increases.» Don t just think of Cloud as a replacement to your IT investments. Rather look to Cloud to extend/enhance current technology resources. This will let you get the most from the tech investments you ve already made! Home pg 11

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