The 2010 GFI Software SME Technology Report, an independent market research survey conducted in March this year across 250 small to medium-sized businesses in the UK, showed that a surprisingly high proportion of senior business decision-makers and IT professionals are still unclear about Cloud Computing.

Research highlights

  • The degree of understanding of cloud computing terminology is understandably considerably lower in the business sector than in the IT security sector – 62% of senior business decision-makers have never heard of cloud computing – but as many as 24% of IT professionals have never heard of cloud computing or do not understand the term.
  • In contrast, only 15% and 11% of senior business decision-makers have not heard of managed services and hosted services respectively.  Given these terms are practically synonymous with Cloud Computing conceptually, it would appear there is too much emphasis on jargon, and not enough on the basic components of cloud-based services.
  • 86% of companies of 100-249 staff have deployed or are currently deploying Cloud Computing technology, but only 69% of companies of 10-99 employees and 39% of companies with under 10 employees have done or are doing so.
  • Security – widely seen by the IT industry as the main barrier to adoption – is indeed the second highest perceived disadvantage of cloud computing, yet only 12% of respondents who have actively elected not to pursue this model cite security as the main reason for not doing so, showing a clear disparity between perception and reality.
  • Similarly, 44% of those companies that have decided not to deploy cloud computing cite too high cost as the main reason, yet low cost is also seen as the second highest perceived advantage of the new model
  • 43% of respondents who have chosen not to deploy Cloud Computing would reconsider if the vendors’ terms and pricing were improved while 40% would reconsider if contracts were less restrictive.
  • There is a growing resistance to the on-premise and hosted polarisation. SMEs are increasingly embracing a hybrid model that mixes and matches services to reflect business needs and existing IT skills/infrastructure.

This annual study of UK SME attitudes and understanding, undertaken by Redshift Research on our behalf, has shown that IT vendors and resellers have been largely overestimating the market’s appreciation and understanding of the terminology surrounding Cloud Computing. High proportions of senior business decision-makers (64%) do not understand the term Cloud Computing, but only 15% have not heard of managed services or hosted services, despite their conceptual similarities.

The research also showed that the key perceived disadvantage of Cloud Computing – namely high security risks – is not supported by the reality as security was cited as the principal barrier to adoption by only 12% of respondents.

Walter Scott (CEO), comments, “The UK market seems to be confused by jargon and synonymous terminology and appears to have been susceptible to scaremongering by on-premise providers. Unless these trends can be reversed, UK SMEs are unlikely to reap the benefits of cloud computing for many years to come.”

The benefits to cloud computing were particularly striking from the research. Of those companies who have so far moved some services over to the cloud, 16% have seen a full return on investment (ROI) in less than six months and the vast majority report full ROI in less than a year.

Scott continues, “Whilst upfront costs have been cited as a major factor in choosing not to implement cloud computing (44% of non-deploying SMEs state this as the main reason why), full and rapid returns on investment have been seen by those who have moved their services to the cloud, showing that faith in cloud computing is well-deserved but under-pursued.”

Finally, the hybrid approach of deploying certain applications either on-premise or in the cloud, according to the particular needs or nature of the business is gaining increasing traction.

Scott concludes, “More and more organisations, of all sizes, are requiring greater flexibility from IT. SMEs should not be confined to strictly either on-premise or hosted technologies, but should instead be given the option, according to their own needs. This demand is growing steadily in the UK and there is therefore great opportunity for vendors and resellers who can offer this choice and allow SMEs to maximise their potential return on investment.”