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Does the SMB market have the potential to redefine the cloud vendor landscape?
Does the SMB market have the potential to redefine the cloud vendor landscape? Or will enterprises continue to determine how the cloud evolves? Brian McCallion recently wrote an article about the potential opportunities available to cloud vendors who cater to the needs of the SMB market. As more SMBs move to the cloud, he says "the consolidation of this purchasing power will basically reorganize the tech industry." Do you agree?
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7 Answers
More cloud solutions will focus on the SMB market, because the SMB market has more organizations with needs that can be met with cloud solutions.
However, even if SMB organizations move en masse to the cloud, they will simply be just a large group of individual companies using cloud services unless they organize into some alliance or coalition for the purpose of consolidating their purchasing power.
There's a huge difference between having vendors cater to your needs simply because you are a member of a large demographic that has somewhat common needs, and having vendors cater to your demands because you have formed an alliance or other representative group for the purpose of increasing your economic leverage.
The latter does not happen just as a matter of course, and is not automatic.
Given the number of constituents, and the diversity of their needs, I don't see the likelihood of a broad coalition being formed. At best, the inherent benefits of being part of a large demographic will bring some useful pricing and choice options, but "lobby power" will not happen in any meaningful way across the entire SMB market.
I would say that the cloud market is going through the typical technical evolution cycle. When new technologies emerge, vendors often focus first on large enterprises because they offer the largest sales and often the highest margins. As the technology matures, it makes it way down the technology ladder.
Microsoft has made its mark by focusing more on the SMB space and then working its way up into the enterprise. The fact that it has revamped all of its software so it operates in the cloud illustrates that the technology is making its way down into the SMB space. Technically, SMBs can now run move a lot of their IT infrastructure into the cloud. But the change requires a change in how their view their IT operations and the development of new business processes to support that alteration. So their movement to the new technology will gain more traction as they align their internal operations to support it, a process that usually takes longer than many initially think.
Software vendors moving to the Cloud are certainly looking closely at the SMB needs to shape their offering. That said, the market is so fragmented (industry, geography etc,..) that it is very complex for a vendor (being in the cloud or not) to adapt its solutions for each and every customers. This is were the role of the business process consultant will be crucial to help those SMBs leverage the power of the Cloud apps to their advantage.
API and Connectors/Workflows to interconnect Cloud Apps between each other will be the glue that SMB will be asking more and more from vendors. Even more than pricing, the necessity to avoid vendor lock-in will become very strong among SMBs.
I am in SLC at OMG and will raise these comments at the Customer Cloud Council that I am attending today.
As a member of the OMG CSCC (cloud standards customer council), I Will keep the SMB market in focus. Our mission is to refine requirements for customers of cloud services. Guidanceand insight from use cases.
SMB's are much less IT driven than larger companies. Large corporations have a massive incentive to consolidate their data and IT infrastructure as much as possible, but rightly or wrongly most SMBs do not really care. Smaller companies will adopt the cloud when the applications they use persuade them to do so.
(1) It depends what you mean by "cloud." If you define it broadly to include all online software-as-a-service apps, you'll find SMBs have been in the so-called cloud for years.
(2) If "cloud" is defined more narrowly as outsourcing hosting and a datacenter, even there you'll find many SMBs have been doing it for years. How many small businesses can afford to run their own servers? Not that many.
It's just that small businesses don't typically use terms like "cloud". They are more likely to refer to it with a host of different terms, such as online software, outsourced hosting, and the like.
Surveys that ask whether SMBs are "in the cloud" or use "cloud computing" are usually not that helpful, because they get hung up on the terminology. It's not the terminology that you want to test -- you want to inquire about actual activities. Sadly, all too many research companies use lingo when speaking with or surveying SMBs -- and you know the old saying: garbage in, garbage out.
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