Nomalanga Nkosi

Cloud offers small businesses golden opportunity

Technology has always been a great enabler of to small-to-medium enterprise (SME) success, and cloud computing is set to offer the best opportunities so far.

In fact, according to Rudi Greyling, director of innovation at Avanade SA, SMEs should start to embrace the cloud offerings sooner rather than later.

He says, “Consumers are more technology-savvy and hence they expect the same from the SMEs they do business with. Technology-savvy consumers will expect certain things from SMEs and those that embrace technology get access to these consumers.”

Greyling believes that Internet access is the first need for SMEs in SA, then access to e-mail, to converse and do business deals as well as for administration purposes. “Most businesses need to have a Web site and an online presence so customers can read about their offerings and product brochures. It is vital that small businesses invest in internal sites with which to administer business processes. Printing, scanning and faxing are next on the list, and a place to store documentation, whether it is a store room, or a place in the clouds.”

According to Nomalanga Nkosi, GM of business marketing at MTN Business, a recent SME survey done by Pastel Accounting indicated that there are an estimated 1.5 million SMEs in this country, which is a clear indication that the sector is growing, and as a result contributing significantly towards SA’s economic development. “Because the SME is a largely untapped market, it’s now a focal point for many industries, including technology. SMEs require access to solutions that provide capabilities equivalent to a corporate at a fraction of the cost and the ability to leapfrog immediately onto broadband technologies are two other major benefits of being a SME in today’s business world.”

CONSIDERING CLOUD

Essentially, Nkosi continues, the cloud offers a technology outsourcing option, via the use of the Internet that saves massive costs while providing the technological tools and services SMEs need to sufficiently and competitively operate. With SMEs making up a large percentage of the GDP across the African continent, they have traditionally been faced with technology options that are expensive and risky, she says. Therefore, says Nkosi, there has never been a better time than right now for the uptake of cloud computing by the SME, which has been searching for a much needed “technology break” at affordable rates for over a decade.

“Cloud, in its various flavours, offers the SME an opportunity to choose and align its business to its needs,” says Greyling. “The promise of cloud offerings where pooled resources work to the benefit of the business, as well as the ‘pay-as-you-use’ model, have significant savings in sight for SMEs.”

Jeannine Jennings

A SME can literally be operational with e-mail and a Web site in minutes, Greyling continues, without expensive investment in infrastructure or IT support personnel. “So it becomes an operating cost rather than an expensive capital investment for a cash-strapped SME. The SME can use the cash to better effect elsewhere in its core business. As the SME grows, its IT operational cost grows in proportion with the organisation.”

According to Bruce von Maltitz, director of 1Stream, in many instances, the cloud is actually a security upgrade for SMEs who are unable to invest in security practices and use minimal or outdated actions to protect their data. Moving to a hosted platform can also represent an upgrade in general IT.

He says the levels of service provided under a service-level agreement (SLA) are invariably better than what a business can offer to itself. “Businesses want to be adaptable, so that if they experience rapid growth they can avoid costly investment into expansions in terms of hardware and software – which may not be necessary after a period of demand has faded,” he says.

According to Jeannine Jennings, executive for general business at IBM SA, Forrester predicts cloud infrastructure will grow to $116.5 billion by 2014, and Gartner states 20% of all businesses will own no IT assets by 2012. “These stats indicate that SMEs need to start thinking differently about infrastructure. SMEs require doing more with less, reducing risk, higher quality services – and cloud is the perfect solution. It is extremely simple to deploy and most importantly, one only pays for what is used.”

THE CHALLENGES

As bright as the future of SMEs may look when considering new technologies, the landscape is not free of challenges.

Says Jennings, “SMEs in SA have very fundamental IT challenges – bandwidth and budget.” Added to that, she states, the SMEs here operate in a very different environment when compared to their counterparts in the first world countries. Also, most of the IT solutions have been developed with more developed SMEs in mind. She cites a recent World Wide Worx report which states the basic challenges faced by SMEs are: more accessible connectivity, as there is a big connectivity gap between the established and emerging markets; and business continuity. “Data insurance, IT security and backup are the three pillars of business continuity for smaller budgets,” she says.

According to Greyling, the biggest challenge is the cost of IT support and IT infrastructure. “Small businesses typically have limited resources and because they are small they have narrow focus and tight margins. Their ability to support the cost of elaborate IT infrastructure and dedicated IT personnel is limited and this might make them shy away from IT.”

According to Von Maltitz, IT can be an expensive resource in terms of staff, on-premise hardware and software requirements, security threats and constant upgrading. “In the same breath, companies should not be attached to having their own in-house IT,” he says.

“More importantly,” he says. “They need to focus on their core business, whether it’s selling t-shirts or handling complaints – and not IT problems. By choosing a technology partner with a service-centric, consultative approach, customers can be sure that core issues are set up with the help of the experts, reports deliver the best possible analysis for their business type and goals, and their system functions with optimal quality and productivity.”

“Before making a decision to move to a cloud-based platform, look for providers with the credentials that cite a full house of proven skills and the willingness to be operationally involved,” Von Maltitz concludes.