Moving to the cloud in 2021 is a top IT priority for small and medium enterprises. Due to the changes in the cloud sector, there are now many options for SMEs. Blair Lyon, Vice President Cloud Experience, Linode, explains what SMEs need to consider when choosing a cloud provider.
Today’s small and mid-size businesses face a range of challenges, from traditional problems like competition and growth, to revenue and cashflow pressures caused by the COVID-19 pandemic. Research by MIT found that revenues of small businesses in the United States declined by roughly 40% following the first lockdown event in 2020. According to the OECD report on The Digital Transformation of SMEs, smaller companies were more affected by the pandemic than larger companies, as they had less cash reserves and they are not as far ahead in adopting digital services.
According to TechAisle, moving to the cloud is the top IT priority for SMEs in 2021, closely followed by collaboration and remote work services. Cloud is part of the arsenal of technologies that can help SMEs improve their businesses and keep themselves going successfully after the pandemic. Used in the right way, SMEs can achieve their business growth and profitability goals using cloud computing to support their applications.
The cloud sector has developed rapidly over the last 15 years. From initially being the domain of the deeply technical, many common cloud services, such as storage, compute and networking, have become commoditsed. For SMEs, this has levelled the playing field and made it easier to get started.
What SMEs should look for in a cloud provider
However, SME companies still want help to get things right. And this is one of the biggest problems around implementing cloud today: getting the right kind of help when you need it. Cloud itself is not a panacea – services have to be put together and applied in the right way in order to meet an SME’s needs. While cloud should be easy to get up and running, it should not mean SMEs have to use self-service processes unless they spend big money or shell out on an expensive enterprise level contract.
SMEs should start by judging how their prospective cloud providers approach service. This covers how easy it is to access support, what that support experience is like and how quickly you can access a support professional for a conversation should you need it. Many cloud providers rely on self-service for support at the SME level, but SMEs want more direct contact and human interaction. On the provider side, any cloud provider that offers quantifiably better service than their competitors should stand out.
Alongside service, cloud costs can be problematic in practice for a lot of companies. Cloud implementations scale up and this leads to increased spend over time. However, many cloud services are quite unpredictable in exactly how much they will cost from month to month. This unpredictable spend is actually a feature rather than a bug for the majority of cloud providers – they care about increasing use and capacity, rather than what customers care about in terms of performance and spend. There are other variables to consider too – for example, the same cloud service from the same provider can cost different amounts depending on which availability zone or geographic location it is hosted in. Other variables include data transfer and networking costs that might not be immediately obvious.
Large enterprises can invest in large cloud cost management projects to manage their spend; however, SMEs want more predictable spend levels. Ideally, they want fixed costs that are the same each month in every location, so they don’t have to spend more to host applications and services close to their customers. They also don’t want to be penalised with massive additional costs one month because they were more successful and supported more customers than anticipated.
For SMEs, finding cloud services that offer fixed prices and better cost control over time is the second big consideration after support. This is harder than it sounds. Only cloud companies that can set their own destiny long term can manage their costs – and their approach to customer service – in this way. Rather than having to find short-term profitability at the expense of customers, this longer-term model is about keeping customers successful over time.
The alternative cloud approach
The cloud computing market essentially breaks down into three areas. There are the hyperscalers that have huge cloud installations with sites across the world and hundreds of different services available – companies such as AWS and Microsoft provide cloud services that enterprises can make use of. While SME teams with technical expertise on staff can use these cloud providers, the majority of SMEs will find they lack support options to suit them.
Alongside these, there are a range of other more traditional enterprise IT companies that have launched their own cloud services in the past. These companies tend to focus on the enterprise as well, offering a mix of their own cloud services and multi-cloud deployments. This group also looks beyond what most SMEs need or require.
The third category is the alternative cloud. Alternative cloud providers are hyperscalers that offer commodity cloud services that meet the needs of most SMEs, while also taking a different approach to the bigger hyperscalers or those legacy tech companies.
What sets the alternative cloud providers apart from the others is that they focus on simplicity and ease of use. This does not mean these providers are limited in what they can offer. Instead, they concentrate on the core services and make them easy to consume, including access to APIs, command level interfaces and management services so that SME IT teams can use the services in their own preferred way.
Alongside this, alternative cloud providers can support multi-cloud deployments as well. From a technical perspective, multi-cloud was the preserve of enterprise IT teams that wanted to prevent lock-in to their hyperscale cloud providers. SMEs can benefit from this competition, as it led to more support for common standards and open source. Using more than one cloud service provides resiliency and redundancy, and it can be used just to reduce cost. The important element here is that multi-cloud does not mean automatically picking two of the big three hyperscalers – there are more alternatives that can fill those roles, making multi-cloud a viable option for SMBs.
Lastly, alternative cloud providers are much more transparent on their pricing. You should not need a full time MBA-level accountant to work out your cloud bill every month. Instead, rather than hiding costs or adding surcharges, alternative cloud companies apply a single price for a service that is the same for every region. This makes cloud costs more transparent, so SMEs can plan ahead.
Cloud computing is an essential ingredient in how SMEs can catch up in their markets, improve their business performance and look out for opportunities for growth. However, SMEs require better support and service options around the cloud so they can implement quickly and avoid potential problems. As more SMEs carry out Digital Transformation projects, getting back to the basics of support, service and cost control will help them turn potential into reality.