Cloud - the perfect weapon for SMEs

By AJ Hartenberg, Portfolio Manager: Data Centre Services at T-Systems in South Africa

The trend towards Cloud Computing gives smaller companies unprecedented access to enterprise-grade software and infrastructure services – allowing them to grow rapidly and compete with larger, more established competitors.

With the new, consumption-based models that are enabled by the Cloud revolution, small and medium-sized enterprises (SMEs) no longer need to worry about a large, upfront Capex bill when provisioning IT services. With Cloud-based services, the cost of Information Communication Technology (ICT) becomes a more manageable monthly Opex bill.

In fact, smaller companies and start-ups are now able to access virtually the same quality IT services as the largest corporates. This assists with levelling playing fields and lowering barriers to entry in many different industries. It’s allowing young companies to grab significant market share at breakneck speed.

Over the past few years, we have seen the advent of new companies that have successfully deployed hosted IT services to grow at astonishing rates, and (combined with new business model approaches) compete head-on with the established players in their respective industries.

With over half a million rooms or properties in its network, room-letting network Airbnb is poised to overtake the likes of The Hilton and The InterContinental Groups in 2015, as the world’s largest hotelier. At $17 billion, taxi network Uber’s valuation is now twice that of Avis and Hertz combined. Examples like these are playing out in almost every industry across the globe – and one of the common threads is the challenger’s use of Cloud services to scale at rapid rates.

By fully outsourcing every aspect of their emerging IT estate to trusted Cloud providers, SMEs are given the freedom to focus on the core aspects of their business and its growth. They do not need to worry about issues like licensing, raising capex budgets, and retaining large, expensive IT teams.

Added to this, the Cloud enables SMEs to flexibly provision new tools and services as they require them, and adjust their technology assets based on customer interactions or changing customer demands.

New ideas are borne out of this kind of experimentation; and the concept of “failing fast” with minimal impact, comes to the fore. Potentially, new business models emerge – and the SME is better positioned to ‘pivot’ to new products, services, or customer segments.

So what is currently holding back the widespread adoption of the Cloud by local SMEs? In fact, the biggest barriers to Cloud adoption are largely based on misperceptions, namely that the Cloud is:

  • Not secure - putting valuable intellectual property at risk of theft
  • Too expensive - meaning it is out of the reach of cash-strapped smaller companies
  • Impractical due to poor connectivity - the concern that in South Africa we do not yet have the bandwidth and reliability that makes Cloud services possible

In reality, all of these concerns (and others) can be allayed by the SME simply ensuring that it is using the right Cloud partner and hosting model.

Firstly, private Cloud solutions ultimately mean internationally graded stronger levels of security than on-premise cloud solutions. Secondly, ensuring the correct IT solutions are provisioned, and at the right piece points, transforms large capex items into manageable opex costs. And finally, with the surge of undersea cables landing in SA and the costs of bandwidth continuing to plummet, connectivity is becoming less and less of an issue.

The way in which an SME decides to adopt Cloud services depends on the management team’s appetite for change, the nature of their business, and the maturity of their current on-premise technology assets. In designing an adoption roadmap, the SME would look to consider three primary areas of the IT estate:

  • Infrastructure as a Service (IaaS) - such as computing and storage resources, backup and recovery, and Web hosting
  • Platform as a Service (PaaS) Offerings - like database integration/configuration, testing toolkits, and solutions geared towards web development and mobile app development
  • Software as a Service (SaaS) Offerings - ranging from basic communication and messaging tools, to things like ERP, CRM, content management and business intelligence services. In fact, with SaaS, firms can completely outsource their IT service management.

When building a business case for Cloud adoption, SMEs often find a number of compelling lines of reason, and some surprising advantages to hosted configurations. The Cloud revolution may have started with the larger corporates, but today, even the smallest SME is in prime position to benefit from it.


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