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74% Of SMBs To Increase Cloud Software Spend

More than half of smaller firms plan to boost their 2011 budgets for collaboration software, according to Egnyte.
By Kevin Casey
Information Week
March 3, 2011
Nearly three in four (74%) small and midsize businesses (SMBs) will increase their spending on cloud-based software in 2011, according to a recent survey conducted by Egnyte.
Over half — 51% — of SMBs, meanwhile, will bump up their budgets for collaboration software this year. Egnyte, which sells storage, backup, file sharing, and other Web-based services, polled 125 of its resellers on the 2011 spending plans of their SMB customers. The survey was conducted online earlier this year by Zoomerang.
Those rather rosy outlooks for the year ahead could turn even brighter: 44% of respondents to the collaboration software spending question said “I don’t know,” while just 6% answered a definitive “No.” (Egnyte rounded up the final percentage breakdowns in its report, which results in a total of 101% for the collaboration question.)
Likewise, only 2% of respondents said no when asked about spending increases on cloud-based software overall. Although it goes by many names — Web-based, online, software as a service (SaaS) — cloud, in this case, refers to software hosted off-site and online.
The survey’s results come on the heels of Parallel’s recent $8.6 billion valuation of today’s overall SMB cloud market. That study, which included all hosted IT functions, projected an additional $13 billion of future growth for the SMB market. Other reports released earlier this year have signaled increased IT spending overall in the SMB sector.
The apparent loosening of the IT purse-strings at smaller companies could be the result of repeatedly delaying tech refreshes during the recent recession. Analysys Mason anaylyst Steve Hilton made note of that broader trend in a recent interview, saying: “The global economy is turned around, so in the developed markets of the world, small businesses are starting to see their businesses grow again.” As a result, it would appear SMBs — though always focused on costs and realizing quantifiable returns on their technology investments — are ready to update.
A rather specific — and just a bit leading — question in Egnyte’s survey asked: “What portion of your customers (SMBs) who operate virtual businesses or have remote workers and offices could benefit from cloud storage services?” A full 38% said “all of them.” The poll also asked if hybrid cloud storage services are viable replacements for file servers at SMBs; 79% said yes.
While the news would appear good for cloud providers that target smaller businesses, those that sell their products through third-party partners may need to temper their excitement somewhat. When asked if cloud computing vendors “adequately address the needs of resellers” today, 68% said no.
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