Seventy Percent of the Small to Medium Size Business Market Apparently Remain Uncommitted to a Cloud Computing Strategy

On May 15, 2014, Microsoft’s Small Business Office Blog published a post written by Kirk Gregersen, a General Manager. In this post, titled Survey finds technology is critical for small business owners but many have yet to adopt cloud solutions, Mr. Gregersen claims “[o]nly 30% of small businesses are using cloud technology, and 10% are not familiar with cloud technology.” Mr. Gregersen’s claims are based on the results of a survey of over 500 small business owners.

Of course, one needs to ascertain the demographics of the survey respondents to determine the likely usefulness of the results for an analysis of the suitability of cloud computing offers, including Microsoft’s own Office 365, for the broad SMB IT market. Microsoft® offers a minimum of detail on this topic. As well, only the questions presented to each respondent are available for review.

Nevertheless, the results appear to be consistent with those recently published by one of Microsoft’s Managed Partners, ConceptSearching, which ran a study of enterprise businesses and, interestingly enough, came up with the same 30% adoption number for cloud computing. Both of these estimates, however, are 50% higher than those presented by IBM’s CEO, Ginni Rometty, during her Keynote presentation for MobileWorld Congress, 2014. (if readers would like to obtain links to either the ConceptSearching Study, or Ms. Rometty’s MobileWorld Congress Keynote, please contact us. We will be pleased to send the links upon request). Ms. Rometty referred to a more likely percentage of merely 15% of enterprise applications migrating to cloud availability by the end of 2016.

The upside of all of this discussion is either a rosy picture of year-over-year revenue growth for Microsoft, and its peers in the cloud IaaS and SaaS markets, namely Google and Amazon. Or, a dismal picture of a stubbornly resistant segment of both the SMB and enterprise markets to cloud computing offers. I admit to favoring the latter takeaway from this data. The paramount obstacle, as I see it, is the inability of these suppliers to demonstrate really secure infrastructure, meaning the kind of formidable, well defended architecture capable of withstanding any malicious threat — especially one emanating from state sponsored terrorist attack.

Unless and until the suppliers “put up or shut up” on this point, the core of these markets will likely think better about cloud and continue to support an on premise computing strategy with, perhaps, a cloud (or even a public, multi-tenant cloud) component for mobile workers, or to support a corporate BYOD policy. In this scenario, I think Microsoft, IBM, Oracle, SAP will continue to demonstrate profitable business, while their pure cloud play competitors (Google Apps, Amazon AWS, Salesforce, Workday, etc) will not fare so well. The difference between these two groups of competitors is, of course, the installed on premises computing base already established by Microsoft, et al.


Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

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