Microbusinesses: The Untapped Cloud Market

I recently read a Cisco Systems research paper about cloud adoption among SMBs. I was struck by the number of microbusinesses (defined here as fewer than 10 employees) operating in the United States today. There are about 21.7 million non-employer firms (self-employed, with no additional employees), with another 4.8 million businesses with one to nine employees.

You might think that this market doesn’t have much potential to impact your bottom line as an IT service provider. But you’d be wrong. Firms with up to nine employees bring in about $3,572 trillion in revenue each year, according to Cisco’s research. (Businesses with one to four employees averaged $388,000 each and those with five to nine employee averaged about $1.04 million annually.) Moreover, Cisco estimated that businesses with up to four employees will spend about $16 billion on cloud services by 2015. That’s billion with a “b”—and that doesn’t include businesses with five to nine employees.

This isn’t so surprising—cloud services enable SMBs to access computing services at a lower cost, with system administration and troubleshooting handled by the provider. But the research also showed that microbusinesses often are frustrated with the services available to them. Large cloud providers have standard packages that may not meet their needs. They don’t get the personalized support they require and don’t have the leverage to negotiate deals customized for their business.

Microbusinesses offer a prime market opportunity for service providers who offer cloud services. MSPs and virtualization experts are in an ideal position to build their own clouds to host virtual infrastructure, backup and recovery as a service and software-as-a-service (SaaS) for microbusinesses.

To create a cloud offering for this market, you need to consider several factors:

• A system designed for multitenancy: Customer data needs to be isolated and secure. Find a virtualization solution that uses VLANs to host multiple customers securely and efficiently.
• Backup and recovery options: BDR-as-a-service is a high-demand service. Customers need the reassurance of failover options and data recoverability. You need to be able to roll back systems, recover files/folders and quickly provision new VMs.
• Low cost: Microcustomers need affordable pricing, so your solution needs to be built on affordable components so you still earn generous margins.
• Simplicity: Your system must be easy to deploy, monitor and manage, so you don’t go crazy managing many small customers.

Working with microbusinesses has the advantage of letting you add capacity incrementally. For example, Zenith’s TigerCloud 4TB or 6TB storage nodes can host dozens of microbusinesses with its multi-tenant design, isolating each customer’s data with VLANs. As your customer base increases (or you attract larger customers), you can add capacity as you go.

The key to working with microbusiness customers is to tailor sales messages and service contracts to their needs and budgetary constraints. Additional services should be offered as add-ons at reasonable rates, like a cafeteria menu.

Transform your business model and generate significant monthly revenue by developing a cloud offering for this huge and underserved market.

Richard Reiffer is Vice President of Cloud Services at Zenith Infotech and CEO of Global Cloud Consulting. Monthly guest blogs such as this one are part of Talkin’ Cloud’s annual platinum sponsorship.