Small business cloud: the importance of partnership

By John Leonard
13 May 2014 View Comments
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Many small businesses are what might be described as “personnel poor, data rich”. This definition would include professional verticals, such as financial, legal and healthcare services that depend on the secure handling of sensitive data for their livelihoods, as well as the more obvious example of the tech sector.

With the exception of the latter, it is quite common for many small firms to have no technical expertise at all, or if they do have an in-house technical capacity it is likely to be limited, which is why benefits of cloud computing such as eliminating the need for on-site servers and networks and the staff to manage them have been pushed strongly in their direction by its many advocates.

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But despite the potential for cloud services to fill gaps in expertise, that very shortage of in-house staff is actually a barrier to adoption. Small companies are often less able to capitalise on the benefits strategically because they need to rely on suppliers to inform their technology choices, guarantee service levels and look after sensitive data – suppliers whose expertise may be lacking.

Cloud – onwards and upwards

Despite numerous setbacks over the years, the latest being the impact of the NSA/GCHQ snooping scandal, the direction of travel for IT remains strongly towards the cloud.

A quick perusal of analyst reports suggests an average figure of around 20 per cent for the predicted annual growth rate in adoption of cloud services by smaller firms (although of course definitions differ), and analyst Gartner predicts that by 2016 cloud computing will absorb more than half of all IT budgets.

So cloud computing is not going to go away, and some will have little choice but to include it in some part of their IT set-up if they are to remain competitive, even if it is something as straightforward as online storage. A recent round-up of surveys by Towergate Insurance found that among Indian SMEs cloud had reduced IT costs by a third, while two-thirds were using cloud as a platform for innovation. But if these benefits are to be realised small firms will need to forge a closer relationship with their key suppliers.

A Computing survey of almost 100 IT leaders within companies with fewer than 300 staff across several sectors of the UK economy, including banking, technology and professional services, found that 36 per cent of them do not have an internal IT team. This implies, as mentioned, that they are dependent for IT advice on a supplier. Indeed, more than half of the respondents said they rely on suppliers for strategic and operational advice at least some of the time. Fortunately they are satisfied, by and large, with the advice they receive, with two-thirds saying they are very or fairly happy (figure 1).

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However, this leaves a third who are less than satisfied. As cloud services become a more important part of the overall IT picture, the danger is that this proportion will grow. Even with a service as seemingly straightforward as online storage, deploying and revoking cloud services is rarely a matter of flicking a switch. If you have terabytes of data with one provider, where are you going to put it if you decide to change? Advice is needed.

Many of the suppliers advising small businesses will be resellers contracted to sell certain brands. With IT becoming more of a pick ‘n’ mix, either these resellers will need to broaden their range of expertise, small firms will need to hire skills or bring in independent consultants, or more cloud providers will need to start providing dedicated account managers to help small companies.

Asked whether their cloud or hosting partners (those that use them) have a dedicated client manager for their business, one-third of respondents replied that they do. Meanwhile 41 per cent said “No” and 24 per cent “Don’t know”, which in service terms roughly equates to the same thing.

In this new world all suppliers will need to focus extra hard on keeping their customers happy. The move towards cloud means a shift away from on-premise technology, with greater importance placed on business processes. So, within the buyer/supplier relationship, the focus will increasingly be on business and relational issues, such as sector expertise service quality, and less about the technology itself.

Again, there is some distance to go. Only four per cent of respondents felt that their cloud supplier truly understands their business (figure 2).

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Secure partnerships

For small organisations that depend on maintaining a professional and responsive public face, and for those handling sensitive data such as providers of financial and legal advice or healthcare, there will be an increasing need to find a cloud partner or reseller with the right vertical experience and particularly one that can confidently handle the thorny issues around data security.

Clearly there is much work to be done. Nineteen per cent of the small businesses surveyed said that they would not move sensitive data to the cloud because of insufficient trust in their suppliers. Thirty per cent said “maybe, if we can be assured it will be secure”, and a further 19 per cent said that they would, but only if it was guaranteed that the data would remain in the UK; however, just 19 per cent said that data security is covered by their current SLA.

Changes will be needed within the organisation too. For small business IT leaders managing data security is a particular challenge. Even though the onus to secure data may have shifted to the supplier, they will still be in the firing line if something goes wrong. Indeed, they will be held responsible and liable if customers’ data is compromised. For small businesses with no IT department the problem is even more severe and such organisations may need to create some sort of data management role before even considering moving sensitive data to the cloud.

IT managers also need to begin thinking of their roles in terms of strategic business support, rather than operational maintenance. This can be a struggle in smaller organisations where many IT leaders have occupied more of a “fixer” role.

They need to manage a different type of supplier relationship that is more about providing an efficient always-on business service, rather than technical support for packaged software and in-house hardware. Again, some small business IT leaders feel uncomfortable with this shift in priorities.

As they move to cloud they will have to optimise their IT infrastructures for cloud hosting and other services, and for working with their partners’ external systems.

In sensitive professional sectors, each of these areas can present real challenges to small business IT leaders, as governance, transparency and regulatory compliance become ever more important issues. Cloud suppliers need to step up and be more proactive in their support.

@_JohnLeonard

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