Cloud computing? No way, say half of SMEs

By John Leonard
07 Feb 2014 View Comments

As a statement of reality, the oft-repeated mantra “Cloud computing is ideally suited to smaller businesses” is about as helpful as “Brown-eyed people like biscuits”.

Further reading

First, like brown-eyed people, small and medium enterprises (SMEs) are an extremely varied bunch. SMEs make up well over 90 per cent of all businesses in the UK. It is a sector that embraces everything from an app developer in London’s trendy Shoreditch to a family farm in the Scottish Highlands. And like biscuits, cloud services come in a variety of flavours, from simple storage space, to more complex software such as collaboration, mobility, CRM or office suites, to infrastructure or platform as a service, and even private cloud infrastructure. So, like many marketing mantras, this one is pretty meaningless.

That aside, one thing that most SMEs do have in common is a small IT department, and renting rather than buying IT services and software may be a sensible way of stretching limited resources further. But is this enough to make them particularly suitable candidates for cloud, above and beyond large firms? 

Among the benefits of cloud most frequently cited by the industry are these: access to enterprise-grade technology; moving capital expenditure onto the operational budget; increased flexibility and agility as technicians are freed up to do more strategic work; and being able to expand and contract operations at will.

You can see why all these would appeal, but on the other hand, the needs of smaller businesses can be very specialised, and as such may be better served by dedicated staff in-house.

We surveyed a sample of 120 IT managers at UK firms with between five and 250 employees. Fifty-eight per cent operated from a single building, while at the other end of the scale five per cent had more than 10 premises. All sectors were represented, but as subscribers to Computing, the sample was slightly skewed towards the technical, so one might expect the respondents to be more receptive to the benefits proffered by cloud than average.

Nevertheless, one-half of the respondents said they run all their IT in-house. Equally the sample was split pretty much down the middle between those who perceived cloud to offer particular benefits to small businesses and those that did not (figure 1).


[click to enlarge]

Among the enthusiasts were a few firms (five per cent) who were already in the process of shifting their IT wholesale to one of the big public cloud providers: “We run all our SaaS products from AWS,” said the CIO of a small technology company, explaining that all in-house servers were being decommissioned in favour of a “cloud-first” policy.

A further 11 per cent said they are undecided on further server investment and that ultimately their decision would depend on developments in the market.

Far more common, though, was a hybrid approach. As firms develop and markets change, many will find it expedient to offload certain applications or administrative functions (most frequently email and backup, respectively, according to the survey) while retaining core IT services in house.

“Our ticketing system needs to be highly available, highly resilient, and able to deal with huge peaks in demand. It’s not cost effective for us to serve this sort of system in-house or on-premise,” said the IT manager at an entertainments venue, an exponent of the hybrid approach who also confirmed that “local servers are and will remain the cornerstone of our IT infrastructure for the next three years.”

In settling broadly on a hybrid model, smaller firms are no different to their larger counterparts.

Overall levels of cloud adoption among UK SMEs seem little different to that by UK enterprises – if anything they are rather less. Half of those surveyed said they run everything in-house, while in a separate Computing survey conducted in November 2013 only 39 per cent of medium to large organisations said the same.

If cloud really is ideally suited to smaller firms it would seem they’ve yet to get the message.

Dropped connections

Connectivity is one area where there is a real differentiation between large and small. Larger organisations will generally have the wherewithal to overcome deficiencies in local broadband provision, perhaps drawing on high-bandwidth services from several different providers. However, SMEs may not be able to afford this, having to make do with a single ADSL line while they wait for fibre to reach their area.

Among the small organisations surveyed, only 76 per cent were fully satisfied with their broadband service in terms of available bandwidth, and 17 per cent said their connection is unreliable. This was sometimes due to a lack of fast broadband in their area. “We’re rural, so no fibre yet,” said one; “Desperate for FTTC, promised via the county council by December 2014” said another;

“Sometimes it hangs, other times it drops totally,” complained a third. However an urban location may be no guarantee of good service: “City centre location but still limited to standard DSL, no Infinity, cable or other,” lamented an IT services firm from the heart of Belfast.

For public-facing applications, the potential frustration and losses in productivity caused by unreliable connections to the internet makes on-premise systems the better choice. So, until connectivity issues are resolved, there will always be a proportion of SMEs that will not even consider the cloud option.

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