New Money? Cloud Computing Deployments Tied to Midsize Revenue

By | Jul 24, 2014

Despite smaller IT departments, thinner profit margins and less free time to spend on technology innovations, midsize businesses nonetheless tie cloud computing deployments to increased revenue, greater collaboration and improved customer service. But it is not entirely smooth sailing for the cloud, with many companies discovering that there is a big difference between public and private solutions. Is there "new money" to be had in the cloud, or are companies just spending in a different place?

'A Strong Appetite'

That is how a recent Information Week article described midsize businesses' take on cloud computing. Even with the challenges of moving to a distributed computer architecture with limited staff and budget, companies still see an intrinsic link between this disruptive technology and increased ROI. Reporting on data from Oxford Economics, Information Week notes that 32 percent of small and midsize businesses were looking to the cloud "primarily to save operational expenses or achieve greater efficiencies," while 36 percent said the cloud was critical to their innovation strategy and 55 percent said the cloud was critical for long-range vision.

This should not come as a surprise, since cloud vendors have been steadfastly supporting the idea that small, midsize and enterprise companies can compete on the same playing field once backed by the cloud. Midsize companies have taken this notion to heart, since they are often faced with higher IT spend and smaller profit margins, especially as they expand into new market segments.

Not Satisfying?

As a July 21 CIO article points out, however, this view of cloud adoption is not all-encompassing. While research firm Forrester predicts cloud computing "hypergrowth" over the next few years, long-range predictions put only 19 percent of 2020's worldwide $230 billion tech investment in the cloud infrastructure. Other experts argue that private clouds present their own unique problems; midsize C-suite executives often expect on-premise clouds to offer the same kind of elasticity and agility as public cloud computing deployments, when in fact they are complex, costly and heavily governed.

So what does this mean for the midsize IT bottom line? Is the appetite for cloud computing doomed to be unsatisfied, like the ice cream fanatic who tries to convince himself that frozen yogurt is an acceptable substitute? In a word: Maybe. While there is a logical connection between cloud deployments and increased revenue, trying to substitute an all-cloud meal for more traditional IT fare will only lead to empty stomachs and broken promises. Part of the problem here comes from cloud hype, which tries to position new technologies as easy replacements for familiar standards, but without the benefit of agreement on what exactly constitutes a "cloud" or how the technology is best used.

Ultimately, midsize companies may be best served by considering the cloud a kind of buffet. Take what is needed and no more, and remember that small, on-premise deployments are often precursors to broader public initiatives. Not just rearranged IT spend but new money — often in the form of improved project completion times or decreased hardware costs — is possible in the cloud with the right mealtime strategy.

This post was brought to you by IBM for Midsize Business. Dedicated to providing businesses with expertise, solutions and tools that are specific to small and midsized companies, the Midsize Business program provides businesses with the materials and knowledge they need to become engines of a smarter planet.

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