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Cloud and Cash Flow: How Cloud is Changing the Profit Game for SMBs

By R. J. Stangle / Jun 13, 2016

Two of the top ten IT challenges facing SMBs today are; budget constraints and app and data integration, according to SMB IT Market Research and Industry Analyst firm, Techaisle.com

When you also consider SMBs’ top IT priority from the same study is cloud computing, it may be that they have already found the answer toward neutralizing their biggest dilemma.

Moving to the cloud has the potential to swiftly slash those top two challenges; and to dramatically change how SMBs take advantage of technology to compete on a global stage.

While the benefits of cloud computing have long been debated, more and more enterprises are adopting cloud platforms. IDC reports that worldwide public cloud service spending will double by 2019 to more than $141B.  Cloud is a movement that is gaining momentum and the results of its adoption will see SaaS applications (software as a service) grow by 20.3% in 2016.

How Cloud Helps SMBs Tackle Budget Constraints

Managing cash flow. For every SMB owner, the cliché “cash-flow is king” is no cliché. As many as 82% of SMBs go out of business due to poor cash flow management. But the cloud offers both a short and a long term solution to the problem of cash flow. Let’s dive a little deeper.

Short Term Savings

The up-front cost of an application stored in your data center is one of the cloud’s most attractive benefits.  Because basically, there isn’t much of one. By moving to cloud-based applications, SMBs can either partially or fully cut out the cost of hardware, infrastructure and manpower associated with their data center.

The cost of managing your own data center is a huge expense for SMBs and take up a considerable amount of resources to manage.  With every application, a stack is added to the server. Integration and management is then required, meaning an SMB needs to have qualified staff on hand with the right resources to successfully implement the application and manage it on a continual basis. Many in-house resources are generalists and not specialists – meaning they often run into difficulty or need extra support to properly implement and manage each workload.

Moving to the cloud eliminates most of the capital and resource commitments demanded by onsite applications. Finding a service provider who bundles core services from applications to broadband gives the SMB not only the simplicity of a single-point-of contact but most importantly an immediate cost savings over implementing in-house.

Long Term Savings

An SMB invests in a technology application because it is integral to its operation. Running the application in the cloud reduces up-front costs, but to get the most long-term value and ROI, the SMB needs to adopt a complete onboarding approach. Successful deployment of the application and maximizing all applicable features increases overall success for both:

  • The service provider who will reduce churn and increase customer life-time value; and
  • The SMB who will maximize productivity and profitability while increasing employee satisfaction.

Full application adoption is contingent on the user understanding, adopting and embracing the application. In this subscription-based ecosystem, the service provider’s role, as a trusted advisor, is to educate users to realize the full value of their applications and then to properly support the SMB so that downtime is minimized, users are supported and new features and functionality are introduced through planned upgrades.

Service quality and performance are often synonymous with the brand of an SMB.  When an SMB fully adopts an application designed to make them more efficient and productive, they are able themselves to provide higher levels of service while maximizing their technology investment. It’ a win-win all around.

But because many SMBs can easily get lost in how to use the new technology, they may not realize the value it will deliver. Something as simple as “unfamiliarity with the browser interface” impacted adoption rates for 44% of users switching to Office 365 according to research from Better Cloud.

For service providers who can offer onboarding services, the opportunity to differentiate their own brand while increasing user adoption across their clients has the potential for significant benefits. Developing deeper trust and relationship with customers reduces churn while up-sell and cross-sell opportunities will have higher conversion rates. It’s human nature. We all do more business with people we know, like and trust.

Integration

Data is one of the top assets of a company today.  It is the quantitative and qualitative measures on which a company’s operations prosper.  It is the heartbeat of every business. Applications bring your data to life by capturing, storing, sharing and analyzing – delivering the insight every SMB needs to run business effectively.

By moving into the cloud and building a cloud-based data integration strategy, SMBs have an opportunity to tear down silos and better manage their data.  With every strategy though, there is a risk of workflow disruption and the potential loss of data, settings or preferences.

Working with a service provider who offers end-to-end support, an SMB can expect an automated migration process that includes set-up, app and data integration and validation with no down time. By taking advantage of these additional services, SMBs will reduce risk and increase the value of their cloud migration. The good news for service providers is that this is a value-added service that SMBs are willing to pay for. According to recent research conducted by Microsoft, 40% of customers will pay for migration support, 40% will pay for up-front assessment services and 38% will pay for cloud transformation capabilities.

Ultimately, for every SMB, when cloud is done right, the SMB has the technology to support their business growth and profitability, while the service provider has likely cemented a lifetime relationship with a highly valued customer.

Want to know more? Check out our whitepaper on Supporting SMBs in their Journey to the Cloud.