2012 will be ‘breakthrough year’ for cloud adoption

Will 2012 be the year that smaller businesses embrace the cloud in a bigger way?
Depends on who you ask, of course. As we prepare to bid goodbye to2011, ITBusiness.ca turned to some cloud consultants and providers fortheir view from the trenches, and also looked at some statisticalreports for a snapshot of indicators about SMB cloud adoption in the coming year.

Based on those signposts, cloud deployment could be headed for an uptick among SMBs in the next 12 months.

IT consultant Stuart Crawfordtakes that bullish view, predicting 2012 will be a turning point whenmore SMBs will move to the cloud. That migration will be fueled byaging SMB IT systems, a resulting overall increase in SMB IT spendingplans, and the fact that many SMBs feel the wait-and-see period is overnow that larger enterprise has already taken the cloud for a testdrive.

“I think that’s the next (cloud) frontier, those traditional on-premisesolutions for smaller mid-market companies, the 25- to 100-employeetype of companies,” says Crawford, president and chief marketingofficer at Ulisitc Inc., a Calgary Internet consulting firm with a managed services provider (MSP) focus.

“Next year is going to be a breakthrough year…We’ll see a lot of thiscloud solution (SMB market) really take off, especially since many PCrefresh cycles are coming due in 2012,” says Crawford, a member ofITBusiness.ca’s editorial advisory board.

“Successful adoption in the (larger) enterprise will make it morecomfortable for adoption by the SMB market. If their larger competitorsare using these technologies and gaining market share from the smallerbusiness market, then (SMBs) have to transform the way they do businessusing technology,” he says.

A flurry of global studies released this year seems to support anoptimistic outlook for SMB cloud deployment. A survey of 573 firms in18 countries by business IT specialist Avanade Inc.found 55 per cent are expanding their IT budgets in 2012 and 60 percent cite cloud computing as their top IT priority next year.

The Avanade study also shows SMBs have invested more in private clouddeployment than their larger counterparts in all IT categories studied:security, networks, software, storage, data centres, virtualization andstaffing. And Canada seems to be catching up to its Americanneighbours: overall cloud adoption among Canadian firms surveyed (ofall sizes) grew 68 per cent since Avanade’s earlier 2009 study, versusjust 19 per cent growth among U.S. companies surveyed.

A Microsoft Corp.study of 3,258 SMBs in 16 countries found that 39 per cent of themexpect to be paying for one or more cloud services within the nextthree years, up from the current paid usage rate of 29 per cent. Thereport, which came out in March, also says the number of cloud servicesthat SMBs pay for will almost double in most countries over the nextthree years.
In April a Spiceworks Inc.survey of 3,000 IT professionals worldwide reported that SMB cloudadoption had doubled in the previous six months. Twenty-eight per centof SMBs reported using at least one cloud service in the first quarterof 2011, up from 14 per cent in the second half of 2010. The study alsoforecast SMB cloud deployment would hit 42 per cent by mid-2011.
A September ITBusiness.ca studyjointly conducted by Dell reveals SMB numbers that are not only morerecent but also more bullish on the cloud. About 44 per cent of 300Canadian SMBs surveyed said they’re already using some form of cloudtechnology this year, a higher percentage of current cloud usage thanthose cited in the Avanade, Microsoft or Spiceworks reports.

Yet another key statistic consistently tops all of these surveys andothers on cloud technology: security concerns, the number one reasoncited by those who haven’t moved to the cloud yet.

Security is still the biggest issue brought up by clients of Murray Quibell, president and CEO of Aqurus Solutions, a Calgary consulting firm specializing in ERP and cloud accounting solutions.

“There’s some hype (about cloud security) and it’s creating awareness but it’s confusing (people) too,” he says.

Negative publicity about cloud service outagesat Amazon.com Inc. and Microsoft Corp. have definitely dampened SMBenthusiasm for the technology, Quibell says. But he believes more SMBsare now ready to sign on to the cloud after educating themselves aboutits risks and rewards.

“It doesn’t matter what the technology is, there are risks inherent,”Quibell says. “In many cases (data) is way more secure … if it’s housedin professionally managed data centres and getting away from laptopsthat can be fried or stolen. If people look at it from that perspectivethey’ll really make an intelligent, informed decision.”

Some SMBs opt for private rather than public cloud to mitigate securityand privacy concerns, he says. That trend is reflected in the Avanadestudy, which found that security, privacy and regulatory concerns arefueling a preference for private versus public cloud as the marketmatures. Just over 40 per cent of companies Avanade surveyed areutilizing private clouds and a further 34 per cent plan to do so in thenext 12 months.

Christine Wong is a Staff Writer at ITBusiness.ca. Follow her on Twitter, and join in the conversation on the IT Business Facebook Page.

Christine Wonghttp://www.itbusiness.ca

Christine Wong has been an on-air reporter for a national daily show on Rogers TV and at High Tech TV, a weekly news magazine on CTV's Ottawa affiliate. She was also an associate producer at Report On Business Television (now called BNN) and CBC's The Hour With George Stroumboulopoulos. As an associate producer at Slice TV, she helped launch two national daily talk shows, The Mom Show and Three Takes. Recently, she was a Staff Writer at ITBusiness.ca and is now a freelance contributor.