SMEs are Living in the Cloud: So What's the Silver Lining?

The cloud may still seem like a mysterious entity to many, but businesses across the world are embracing cloud technology to streamline processes and save money.

The cloud is a term used for an online location where you store data. By placing data, files and software "in the cloud", it can be accessed anywhere, at any time, from any device, provided there is internet access. This makes the cloud a powerful business tool for anyone competing in a global market.

Businesses across the world are embracing cloud-based software and technology to help them deliver quality goods and services. The cloud industry is growing rapidly, and early industry leaders such as Xero (cloud accounting software), NetSuite (enterprise software) and SalesForce (cloud CRM, sales team software) are rapidly spreading the cloud gospel across the world.

According to Gartner's Report on cloud computing, global spending on public cloud services is expected to grow from $79.6Billion in 2010 to $210Billion in 2016. ("Public Cloud" is a term for services offered to the general public via the internet, either for free or a pay-for-us fee. In a "Private Cloud", a proprietary computing architecture provides hosted services to a limited number of people behind a firewall.)

So where is cloud going? What are the current trends in this innovative software space? Let's take a look at cloud trends for different types of technology:

Software-As-A-Service Trends

Software-as-a-Service is the most common mode of cloud technology. With the Software-as-a-Service (SaaS) model, the vendor or service provider hosts the software, and customers access it via the internet, usually for a monthly or yearly fee. Without the cloud, SaaS packages couldn't function, because the software itself – and all the company's data within that software – is stored in the cloud.

According to this year's Future of Cloud Computing Survey, 75% of all business people are using at least one SaaS platform – this might be accounting software like Xero, CRM software like Salesforce, or document management software like Google Drive. By 2016, SaaS based applications are expected to see a growth of 17.4%. The SaaS model has become so effective in the marketplace that many established software companies, such as Adobe, have invested heavily to move their software to this model.

The survey highlights the fact that business is driving cloud adoption across the market, with the three fastest growing SaaS segments being Office Suites (40.7%) Digital Content Creation (32.2%) and Business Intelligence (27.1%). Gartner predicts that CRM will have the largest global market of all SaaS markets, forecasting growth from $5billion in 2010 to $9billion in 2016, with a predicted 15.5% CAGR worldwide.

Infrastructure-As-A-Service

In an IaaS model, an organisation outsources the equipment used to support their operations, including storage, hardware, servers and networking components. The service provider owns this equipment and bears the responsibility for maintaining it and keeping it secure. The client will pay on a per-use basis for this infrastructure.

According to the Future of Cloud Computing Survey, IaaS usage is on the increase, with 45% of companies now using IaaS products, up from 35% the previous year. Gartner predicts IaaS will be at 41.7% CAGR (Compound Annual Growth Rate) by 2016. Of the 2001-2016 CAGR, 43.2% is Compute, 36.6% is Storage, and 16% is Print. Gartner estimates that the Compute sector will experience a large revenue growth - 43.2% CAGR by 2016.

Why are thousands of businesses adopting cloud?

So what's driving the adoption of cloud-based technologies? According to the Future of Cloud Computing Survey, that would be business agility (54.5%) and scalability (54.3%). The survey suggests that cost, innovation and a more mobile workforce are also significant factors. Businesses seek to find more cost-effective ways to operate, and are keen to be seen as technology leaders by embracing the cloud.

Security is still the biggest inhibitor to cloud adoption, with businesses worried about the safety of their data online. 46% of survey respondents listed security as their top cloud inhibitor. But other concerns are not far behind – 46% of businesses are weary of IT management becoming more complex, as companies struggle to balance an array of different platforms. Others worry that they are locked in to contracts with vendors, or that the programs they've chosen from the vast array of choices available won't work together.

But where there are challenges, there are also opportunities. Many providers are becoming software platforms. For example, Xero accounting software has a thriving marketplace, which consists of 300+ add-on software partners, each adding additional functionality to the accounting software. For example, WorkflowMax is an all-in-one job management software for service businesses, that integrates seamlessly with Xero to provide a seamless flow of data from one software to other and back.

40% of businesses also report that they expect to increase investments in training, in order to support the expansion of cloud technologies into their organisation.

It's Cloudy Days Ahead

Both Gartner's Report and the Future of Cloud Computing survey point to a bright future for cloud-based business solutions. Growth in the industry is strong, with Software-as-a-Service systems leading the charge. As the major players in this field stabilise, many of the innovators are focusing their attention Infrastructure-as-a-Service and hybrid cloud models, bringing business owners the best of all sides of the cloud.

As more and more businesses move some or all of their systems into the cloud, the industry will grow and change to meet their increasing demands. In today's mobile, streamlined, tech-driven age, the cloud is providing the tools enabling businesses to thrive.