SMBs : Great Opportunity for Cloud Computing Firms

Small and Medium Businesses (SMBs) are cornerstones of any economy, they are largest employers, agile and also try to adopt technologies faster (in most cases, when affordable) as compared to large ones. SMBs are always looking to optimize their costs as they do have large war chests as big firms, combine that with fast decision making and you have a perfect customer for cloud computing industry.

Why SMBs need cloud?

SMBs are interested in cloud applications because of various advantages it offer in line with their business model:

  • Low total cost of ownership of applications because of pay as you go services. No need to have a dedicated in-house IT team to manage applications. This ensures they focus on their sore business and not supporting tasks.
  • Easy implementation and upgrades. Many SMBs for example, are worried about loss of data as they do not have systems and processes in place to take regular backups. They opt for easy to use cloud based backup services.
  • Possibility of quick scale up in case business increases and scale down in case of low business cycle

It is because of the above reasons, a research by Forrester concluded that, SMBs will be the key driving factor for cloud computing services in future. It also identifies that SMBs will be specifically interested in services which can assist them in:

  • Marketing (Business to Business, Business to consumer, Consumer to Business)
  • Communication: enable their clients to interact with them online. Also enable smooth interactions within the business (internal communication)
  • Product / Service development: conceptualize, develop and launch new products

Where Opportunity lies for Cloud companies with SMBs?

Many companies e.g. Microsoft, Salesforce, Racksapce and many many more have already started tapping thisCloud computing for SMB opportunity by rolling out targeted products. Considering price sensitive nature of SMBs, these products are low cost with limited but good enough features. Several companies have even launched free services – e.g. Google Docs. a free service to share and store documents. Skydrive by Microsoft is also a free backup / storage service.

On a broad basis, applications where SMBs look for assistance can be categorized in two buckets:

  • Non accounting / finance related applications – these are the ones which do not need to directly interact with accounts dept. of the company. They include marketing, customer communication, CRM, internal communications, advertising, etc.
  • Finance / financial planning related: This includes SCM, scheduling, order related applications, financial data (revenue, costs, settlements)

It is the first category which is an easier target for cloud companies to push. It is not that the market for second category does not exist, but it is harder to crack. Strategy of selling application catering to first category and then up selling / cross selling later is much easier then directly selling applications of second type. Today some of the most common cloud applications used by SMBs include:

  • CRM : Customer support and interaction
  • Sales and marketing automation
  • Accounting and financial transactions
  • Content communication and collaboration (CCC)

Cloud companies can start focusing on SMBs which are acquainted with internet in general or are using some basic applications on internet. These firms, with some basic background on how to work over internet can obviously adopt cloud services quickly and easily as compared to ones which do not.

Of course the exact offerings for any potential SMB customer can only be finalized by understanding the business and requirements, but if above simple insights are kept in mind it is easier to spot a potential and convert to a client.
Small and Medium Business present a great opportunity for cloud companies. They just have to develop products and services to cater to the specific requirements of these businesses.