Microsoft Corp. released its global "SMB Cloud Adoption Study 2011," which investigates how cloud computing will impact small and midsize businesses (SMBs) in the next three years. The research finds that 39 percent of SMBs expect to be paying for one or more cloud services within three years, an increase of 34 percent from the current 29 percent. It also finds that the number of cloud services SMBs pay for will nearly double in most countries over the next three years.

The findings show an increasing opportunity for hosting service providers to profit in the cloud from offering services such as collaboration, data storage and backup, or business-class email. Some key findings include the following:

- Those SMBs paying for cloud services will be using 3.3 services, up from fewer than two services today.

- Past experience with support from a service provider is a key driver of service provider selection among SMBs. Eighty-two percent of SMBs say buying cloud services from a provider with local presence is critical or important.

- The larger the business, the more likely it is to pay for cloud services. For example, 56 percent of companies with 51–250 employees will pay for an average of 3.7 services within three years.

- Within three years, 43 percent of workloads will become paid cloud services, but 28 percent will remain on-premises, and 29 percent will be free or bundled with other services.

"Cloud adoption will be gradual, and SMBs will continue to operate in a hybrid model with an increasing blend between off-premises and traditional on-premises infrastructure, for the foreseeable future," said Marco Limena, vice president, Business Channels, Worldwide Communications Sector at Microsoft. "As cloud computing becomes more ubiquitous and SMBs' existing IT becomes outdated, adoption will grow rapidly. Hosting service providers should consider the appropriate sales, delivery and support models to target larger SMB customers that are more likely to pay for cloud services."

Recognizing that SMBs consume software in a variety of ways, Microsoft offers a range of options for hosting providers to go to market with new services targeting the SMB market.

"As SMBs continue to transition to cloud services, hosting service providers, VARs and SIs will have a major role to play as advisors and providers of IT services in hybrid environments," said Andy Burton, CEO, Fasthosts Internet Ltd. "Hosting providers have expertise in selling cloud services while VARs and SIs have experience selling to SMBs. Fasthosts is helping to bridge this gap by helping VARs and SIs white-label cloud services and deliver them as if they were their own."

Adoption of Paid Services Fueled by Profitability and Growth

The 2011 study indicates that in most countries, cloud service adoption is not limited to SMBs that see themselves as fast growers. The study showed little difference in adoption rates between SMBs that expect to grow in the next three years (42 percent) and those solely focused on profitability (40 percent).

Growth companies want a scalable environment that can meet their expanding needs, with an affordable, pay-as-you-go pricing model that eliminates the need for over-investment in IT. SMBs that want to maintain their size, but want to become more profitable, seek cost-effective, efficient solutions that match their needs for predictability and low overhead cost. Cloud services can serve both sets of criteria.

The Opportunity SaaS and IaaS Represent

The study also looked at adoption of software as a service (SaaS) and infrastructure as a service (IaaS) and found that SMBs that are adopting both SaaS and IaaS services are larger, more growth-oriented and more interested in additional services, such as unified communications and remote desktop support. This provides an opportunity for hosting service providers to offer both SaaS and IaaS in order to acquire and retain high-value customers and maximize revenue per customer.