Cloud Adoption Mimics Outsourcing Trends

A new survey from IT research firm Techaisle has revealed that among small and midsize businesses, cloud adoption is mirroring that of outsourcing.

In fact, the rate of cloud computing adoption shows that while use of cloud services varies by size of business, the pattern of adoption appears to follow a previously observed pattern related to adoption of outsourcing.

The research found in both cases, rather than seeing greater adoption with business size, adoption rises and falls as midmarket companies first use cloud services and then as they grow they attempt to bring solutions in-house and use cloud services again in order to support growth.

Inflection Point

The survey also found that the inflection point for adoption occurs at 20 employees.

Small businesses with 20-99 employees typically expand their use of cloud services and appear to maintain that level of usage until they hit 250 employees. At this level, SMBs begin to bring services back in-house as IT investments rise, according to the company’s research. Adoption of cloud services rises sharply again as SMBs exceed 500 employees.

When looked at as a single group, SMBs are largely adopting some core infrastructure applications and applications specific to their industry. Security and additional storage appear to be the most popular applications, along with industry-specific applications and hosted e-mail.

Research found the picture is substantially different for MBs (midsize businesses), classified by Techaisle as those having 100-999 employees, and SBs (small businesses), with 1-99 employees, when taken separately.

“Midmarket businesses display a greater willingness to adopt hosted infrastructure and platform solutions than small businesses,” the report noted. “Very small businesses’ (less than 10 employees) use of cloud services is characterised largely by industry-specific applications and cloud storage services.”

According to a recent report from SMB IT research firm AMI-Partners, as many traditional SMB channel partners make the transition to the cloud services model, telecommunication service providers (telecoms) are making a strong bid for the SMB cloud share, beyond their traditional voice and data service offerings. The report said leading telecom players such as AT&T, Verizon and Qwest are increasing their cloud service portfolio from hosted VoIP (Voice over IP), hosted email and conferencing services to high-end business applications and managed services.

Telecom Move

In September, Verizon Business announced it would expand its flagship cloud computing services suite, CAAS (computing as a service), next year. CAAS offers enterprises on-demand computing resources, including server, network and storage capacity. Enterprises have a choice between Verizon’s flagship CAAS offering or its hybrid solution, CAAS enabled by VMware vCloud Datacenter, which facilitates moving applications from a private to a public cloud setting. Clients can configure their enterprise cloud using Verizon’s Private IP network or its global IP network.

A report by IT research firm Ovum concluded AT&T, BT, Orange Business Services and Verizon Business have made considerable progress in the arena in just over a year, and in terms of services, can now compete with established players from the IT industry. According to the report, these companies have led a “competitive march” from telecoms into cloud computing, and now have widely acknowledged credibility in the field.

“Over the last two years, cloud computing has grabbed the attention of the IT industry because of its potential to offer a new model for the provision of computing and applications to enterprises,” the report noted. “More recently, leading global telcos have developed and launched their own cloud computing services, including infrastructure-as-a-service (IAAS), as they plan to compete head-on with solutions from leading players in the IT industry.”