SMBs improve chances of better market access & profitability by three times
Bengaluru, 19th March 2018 : In a study to measure the social and economic impact of cloud usage among 275 SMBs across 11 Indian cities*, Microsoft and the Thought Arbitrage Research Institute (TARI) found that small and medium sized companies (SMBs) improved their chances of better market access and profitability by three times with high use of cloud technologies. The study captured data showing significant increase in market reach, improvement in employee productivity and operational processes, and an improvement in work-life balance as a direct correlation of increased cloud usage. CEOs in SMBs said, the use of cloud technologies helpedtheir companies with the flexibility of technology usage and by extension in carrying out business operations. They also said that cloud technologies helped them have better control over business and people processes.
The studyhas, through a regression-based approach, established anempirical relationship predicting probability of impact on socio-economicindicators in relation to change in the level of cloud adoption. Overall, thestudy suggests that thereis a greater than 75% possibility that an SMB adopting cloud will seeimprovement in different metrics within a period of two years of being on thecloud.
AnantMaheshwari, President, Microsoft India, said, “The CEOs of these companies haveseen the positive value and high impact of cloud technologies in transformingtheir businesses. The findings of this study reiterate the power of digitaltransformation. At Microsoft we are deeply committed to empower everyorganisation and every individual to achieve more. We are partneringorganizations in their unique transformation journeys, with each onecontributing to an ecosystem of innovation led growth.”
Reduction in operating expenses and improvement incash flow is seen to be a significant benefit of cloud adoption. SMBs can have improved cashflows of up to 308% due to the dexterity and flexibility enabled bycloud usage. 96% of SMBs find a positive impact on their operatingexpenses within two years of cloud use, which remains stablewith time. Security, business continuity and risk management are other areas ofimportance. 86% of SMBs believe that cloud is a secure platform and that theyexperienced less risk of loss of confidential information.
Accordingto Selva Ramanujan,Director, MontBleu Technologies, on their experiencewith cloud technologies, “Onlineproductivity and collaboration tools are a very good solution for SMBs. Theyallow us to focus on business and not waste funds on acquiring or upgrading ITassets; we can divert the funds to core business activities. Also, upkeep andmaintenance of an on-premise solution requires more funds on manpower and otheroverheads. Security has to be beefed up literally every day to safeguard our informationif we use our own datacenters. All of this is not a problem anymore as ourmails and files are saved on the Cloud.”
A very key aspect is the personal development that isexperienced by the SMB owner. With greater work-life flexibility SMBs showed amovement towards personal development as well. While there was no conclusiveevidence of upwards social mobility, there was a definitive heightened focus onemployee development. Around 94% of SMBs had an increase in number of skilledemployees, with less investment, within two years of high cloudusage. They were also willing to invest more in their upskilling and overalldevelopment, which in turn also led to higher retention.
Commentingon his experience, Dr. Senthilkumar U, Founder & CEO, BiolineLaboratory, said, “Moving to Cloud is the best solution if yourequire IT infrastructure for running your business. Since adopting Cloudtechnologies few years back, we have decreased our capital expenditure inaccumulating high-end hardware and resources. Data availability is ensured withservice level agreements and we have access to the same IT infrastructure andsuite of services that large companies have, which allows us to compete better.Bioline is looking forward to a huge growth enabled by the Cloud.”
Impactacross Industry Sectors
The studyalso evaluated benefits across industries in which SMBs operate. Themanufacturing SMB sector, although lagging behind currently on high cloudusage, demonstrates the maximum predicted impact within two years ofcloud adoption. Retail/Trade, IT/ITeS, Education, Health and Hospitalitysectors are early adopters and already reaping benefits.
Ratification with Government Database
The surveyalso evaluated SMBs utilizing cloud computing with a government database ofMSME companies which are not utilizing any cloud computing service, and hasfound the following:
- Profit improvement/cost reduction metrics: SMBs adopting medium level of cloud services show a 30% improvement, compared to MSMEs on the database which show a 10% improvement.
- Asset utilization metrics: SMBs adopting medium level of cloud services show a 50% improvement, whereas MSMEs on the database show marginal improvement.
- Employee productivity metrics: SMBs adopting medium level of cloud services show a 50% improvement, compared to MSMEs on the database which show a 20% improvement.
Details of the Study
he studyoutlines six areas of impact across low, medium and high cloud usage^:
- Productivity and profitability improvement
- Enhanced customer engagement
- Increased competitiveness through better market access
- More secure business
- Increasingly efficient operations
- Personal and societal development