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Monthly payments among bugbears for SMBs moving to cloud

By Heather Wright, 15 May 2017
FYI, this story is more than a year old

While the subscription model has been held up as a win:win situation for buyers and sellers alike, it’s proving a bugbear for SMBs according to a new survey.

The survey, from cloud management software provider SkyKick – which has local distribution agreements with Exeed and Ingram Micro in New Zealand and Dicker Data, Rhipe, Synnex and Ingram Micro in Australia – highlights a lack of SMB confidence in the cloud, partner difficulty in helping SMBs navigate the rapidly changing market, and a scepticism on paying a monthly fee for cloud software.

Chike Farrell, SkyKick vice president of marketing, says the reseller channel no longer needs convincing that cloud computing is a huge opportunity – but the same can’t necessarily be said for SMBs.

Despite increasing global cloud uptake – with IDC forecasting worldwide spending on public cloud services to reach more than $500 billion come 2020 – a June 2016 survey by Skykick found only 7.5% of SMBs use Microsoft Office 365.

The new survey, which polled the North American IT channel only, delves further into why SMBs appear to be so skittish about cloud, and what resellers can do to guide them on the journey.

“What we hear consistently from partners, is that in the trenches, they’re consumed with overcoming some common challenges in getting SMBs to the cloud,” Farrell says.

“There are still some fundamental challenges that even the best IT cloud partners have to work every day to overcome,” he says.

The SkyKick survey of business executives and engineers or technology leaders at IT partners serving small and medium businesses, looked at the top challenges partners are facing in getting SMBs to the cloud, along with ways partners are overcoming those obstacles.

The top challenge facing technologists, and the second most cited concern from business executives at IT partners, was a lack of customer confidence in the reliability, security and performance of cloud services.

SkyKick says about 80% of those concerns centred around slow or unreliable internet access.

Fifty per cent of IT staff were extremely concerned about the security of data in the cloud.

SkyKick says the partners who report success facing down customer concerns about cloud security were the ones outlining how the 99.999% uptime and security/compliance offered by Microsoft and other leading cloud vendors can beat local-only infrastructure.

The winning providers also showcased how contractual obligations dictate coverage of outage-related costs.

The pace of the quickly changing cloud market was also a concern for more than 50% of executives at IT partners, while 40% of technologists at partners said they had difficulty clearly explaining evolving cloud services to customers, highlighting the need for continuous education for both the partners and their customers.

“The safest first step consistently taken by the best cloud partners is to introduce cloud services to their customers and organisations with more familiar workflows like email, where benefits and solutions are easily explained,” SkyKick says.

Paying for software as a services was also cited as a challenge.

“Despite the maturity of the SaaS model, it turns out that many SMBs are still resistant to paying a monthly fee,” SkyKick says.

“In fact, the survey revealed the number one issue concerning cost is the shift from a one-time fee to a monthly subscription.”

AJ Briant, SkyKick director of SMB sales, says ensuring you don’t skip over the total cost of ownership discussions or assume understanding of bundled services, remote access and so forth, is crucial.

“A blend of on-premises infrastructure with cloud software, plus services, plus integration is much more realistic – and significantly more cost-effective – than doing everything on-premises.

“Basic math is a partner’s friend in showing customers the difference.”

SkyKick says while the results don’t detract from the size of the opportunity at hand – with the company’s research indicating just managing cloud apps takes three hours annually per employee, plus moving them to the cloud and protecting the information, all of which amounts to plenty of hours of IT services work for the channel – partners need to have their eyes wide open to the obstacles which must be overcome.

“The good news is SMBs are clearly looking to partners as trusted advisors in choosing cloud offerings and navigating a complex market,” says Briant.

“In many circumstances the cloud offers better functionality, reliability, flexibility and economics than traditional on-premises systems.

“We see many of our partners having success capturing the opportunity by communicating this value to their customers.”

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