Small Business Moves to Hosted Public Cloud Services

Small businesses are increasingly seeking to avail themselves of public cloud services, and they need the assistance of MSPs to make it happen. A recent report from IDC, “The Pulse of Outsourcing Q2 2012,” explains why SMBs are now turning to the cloud and are creating a new hosted services market.

According to IDC, the loss of business and security breaches that can result from interruptions in IT service are prompting thousands of SMBs to seek public cloud-based hosted service provisioning. IDC research indicates most of these businesses lack the internal resources to host public cloud-based service provisioning internally. They are also seeking the level of service typically associated with cloud computing, such as strong speed and agility, scalability, responsiveness and personalization.

While large organizations are employing a hosted private/hybrid cloud model, SMBs are constricted by cost to the public model and also generally do not need the operational scope provided by the private or hybrid models. Price per unit is currently the most important factor in selecting a cloud services provider, but IDC predicts within the next 10 years quality of service and maturity of provider business model/industry structure will become the most important factors, with regulations also becoming a more significant factor than price.

Taking Long- and Short-Term Views

IDC advises MSPs to balance their cloud services portfolio by taking on clients with both long- and short-term views of how they intend to use cloud services. In the long term, clients use cloud services as a sourcing strategy for IT services. In the short term, clients use cloud services as a short-term sourcing strategy to fill specific tactical needs.

MSPs serving the SMB market should also take long- and short-term views when it comes to designing a go-to-market strategy. In the short term, MSPs should strongly appeal to SMBs’ eternal need for low cost and high volume. Especially by hosting numerous SMB clients on one public cloud, MSPs can offer SMBs substantial discounts on the cost of hosting cloud services and also offer reasonably-priced analytics based on trends and developments tracked across all users of the public cloud. Cloud computing also offers scale and flexibility that is appealing to cash-strapped SMBs that may have unpredictable workflows and storage needs.

In the long term, MSPs providing cloud services to SMBs should focus more in establishing themselves as mature cloud services providers that can meet the same standard benchmarks as the larger hosted service providers, ISPs and software vendors who will inevitably recognize the profit potential of the SMB cloud market and attempt to muscle in. Low price gets customers in the door, long-term consistency and quality of service keeps them from walking out of it.
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