SMBs Eschew Hardware For Cloud Services

To anybody who’s in even the slightest “know” about cloud computing, this won’t be a surprise at all. But it is interesting to view evidence of what we in the media – along with scores of analysts – are all seeing on a daily basis.

Remember all that hogwash about cloud computing being just another IT fad? We seem to remember even Larry Ellison himself pooh-poohing cloud on several occasions from 2008 to 2010 as just “computers connected to the Internet. We’ve been doing that for 20 years. Big deal. I don’t understand what all the fuss is about.”

A year later, Ellison finally has figured out what the fuss is all about. Now that he knows, he’s all about selling cloud platforms for Oracle. But that’s a topic for another column.

SMBs moving to the cloud

Here’s some of the evidence we’re talking about: A rapidly increasing number of SMBs (about one-third in the United States) are moving to cloud services and, as a result, are cutting back on buying on-premises ICT (information and communication technology) staples, such as servers, storage and networking hardware.

This trend is also starting to affect the buying of client devices, such as notebooks, smartphones, netbooks and tablets, according to New York-based research firm AMI-Partners. AMI just finished a major study on the adoption of cloud services by SMBs in about 12 countries.

SMBs’ cloud adoption patterns vary greatly in terms of types of applications and services reflecting their varying levels of comfort with the new paradigm, AMI said.

Still, it’s a scary trend for IT companies.

“While a majority of SMBs are using cloud services in conjunction with their existing applications and services, a small but growing number are using them to replace their on-premises infrastructure. This is especially true for cloud services like CRM, hosted email, hosted SharePoint and others. This has started to affect demand for ICT infrastructure required to run these applications,” says Anil Miglani, SVP of IT Infrastructure and Managed Services Research at AMI-Partners.

Demand shifts

Broadly, AMI’s analysis shows demand shifts in three areas. While the overall SMB server shipments are still growing, these are driven significantly by first-time server buyers, who need it for improving their productivity, as well as replacements and upgrades by SMBs who had delayed their purchases due to the economic environment over the last couple of years.

However, with the growth of hosted cloud services, SMBs no longer need on-premises servers for many applications. This, combined with consolidation and the growing use of virtualisation, especially among the larger MBs, is reducing the growth rate of server shipments.

“The full impact of this shift will be seen much more visibly over the next couple of years, once the replacements/upgrades are completed and also more SMBs start moving their on-premises applications to the cloud,” said Miglani.

IT hardware companies can take comfort in the fact that you still need servers, storage, networking and client devices to use the cloud.

If and when the time comes that all we have to do is imagine a document, and imagine sending it to someone, then we’re really in trouble.

If you’re interested in the deets of this study, go here.