SMBs Look to Hosting Companies for Cloud Computing Services

AMI Partners Report: 

According to AMI Partners (, hosting companies -- pure-plays, telcos and MSOs -- will provide nearly half of the cloud services purchased by U.S. small and midsize business.  The firm predicts SMBs will have invested a total of $34 billion in the cloud by the end of the year. According to the report, hosting providers such as telecom firms, MSOs and pure-plays are uniquely suited to handle the high level of customer service demanded by SMBs because of their long history of providing Web access solutions to the sector.

"A key reason that hosters are becoming a leading cloud channel for SMBs is because they have proven they can effectively handle critical infrastructure, while providing the necessary level of support," said Monik Sheth, research analyst at AMI-Partners. "Poor service can be an immediate deal breaker for any company, and SMBs are no different."

AMI Partners is including telecommunications providers (telcos and cable companies) in the "hosters" category is because many of the solutions offerings are beginning to overlap, especially around IaaS and related cloud offerings, Sheth told Channel Partners. "Telecom firms are making strategic plays in the hosting space, as you can see for example by M&A activity among major telecoms in the U.S. (e.g..Verizon acquiring Terremark and Time Warner Cable acquiring NaviSite)," he said.

SMB cloud services spend includes investments in IaaS, SaaS, web hosting, UC and remotely managed IT services. Two areas where AMI Partners found  SMBs see clear benefits, and are aggressively moving to the cloud, are hosted infrastructure, such as servers and storage, and remote management of IT systems and related applications. That's because SMBs have very limited, if any, internal staff dedicated to managing technology, so deploying these solutions in the cloud, with the support of a trusted provider, is quickly becoming the norm, the research firm explained.



We see Savvis-Century Link and Terremark-Verizon as the telco leaders in providing cloud services to SMBs.  Of course, that's why Century Link and Verizon acquired those two formerly independent companies!  It remains to be seen what competive telcos will do in the cloud space. Those include: TW Telecom, Level 3 Communications, AboveNet, XO Communications, Windstream, and Globe Telecom (amongst others).

Meanwhile, MSOs (multiple system operators)  are becoming a bigger threat to telcos in the business end services and wholesale market,  as more SMBs and wireless operators (e.g VZW) look for alternative providers to meet their needs.  We see Comcast Business as particularly strong in Carrier Ethernet and VoIP to SMB, but they haven't announced anything definitive for cloud computing.

Perhaps, it takes web hosting and IT service management expertise that's beyond the reach of most telco's and MSOs.

What's your opinion?


SaaS Business Apps Drive SMB Cloud Computing Adoption

For anyone looking to capitalize on SMBs’ growing interest in cloud  computing, Techaisle’s recent cloud computing survey offers a trove of helpful information:

  • 46% of SMBs who’ve adopted cloud computing services use only SaaS business  apps; 26% use only IaaS; and 26% use both SaaS business apps and IaaS.
  • 69% of SMBs prefer to procure SaaS apps from a single trusted integration  specialist or vendor.
  • 40% of SMBs desire more training opportunities
  • 36% of SMBs cite lack of app customization as the primary SaaS drawback
  • 41% of SMBs have experienced cloud service integration challenges
  • 49% of SMBs want faster deployments

As for why SMBs are so eager to embrace SaaS solutions, businesses cite  simple installation, minimal configuration, on-demand everywhere availability,  and integrated web-based data backup as some of the most desirable features of  SaaS products.

By far, the most popular SaaS apps are core business productivity tools.  Google Apps and Microsoft Office 365 are two of the best-selling SaaS products  in the SMB community. Google claims that a majority of their 4 million Google  Apps customers (and 70 million users) are SMBs. Similarly, Microsoft says that  it has 100 million Office 365 users worldwide (a majority of which also come  from SMBs).

The demand for SaaS products isn’t limited to office, collaboration, and  email software. As of 2011, QuickBooks Online had 25 million users, and AMI  reports that 570,000 SMBs have adopted cloud-based CRM solutions—a number they  expect to triple over the next three years. is the leader among  CRM vendors, but the SaaS CRM field also includes Applicor, NetSuite, and  SugarCRM. Other SaaS products popular with SMBs are email list management and  marketing, project management, and database development and administration  tools.

Moving forward, the next set of winners in the SMB SaaS market will likely be  companies that provide apps and services that enhance interoperability and  integrate cloud solutions into a single unified framework or control panel.  Given the demand for seamless service and app integration, expect initiatives  like OpenStack, HP’s  converged cloud, and IBM’s  SmartCloud to grow in popularity. Also look for Microsoft  and Google to increase their presence in the broader SaaS market through  Microsoft’s growing portfolio of SMB cloud  services and Google’s Google Apps  Marketplace.

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Alan J Weissberger

Content Manager-IEEE ComSoc Community Site 

North American Corrrespondent & FB Manager- IEEE Global Communications Newsletter

Manager of IEEE member email list (ComSocSCV)