How cloud computing is driving success for Europe’s small businesses
June 21, 2012
The economic news making headlines across Europe is enough to keep any entrepreneur up at night. Despite this, small and medium-sized enterprises have been remarkably resilient and recent research from Microsoft found that a quarter of SMEs in Europe plan to hire new staff in 2012, while a large portion (up to 40% in some countries) expect to be more successful this year than last.
With only a few bright spots on the horizon, why do SMEs have such a sunny outlook? The Microsoft report provides another interesting clue: 18% of SMEs also plan to invest in new technology in the next year. That number may not seem like a blockbuster statistic, but it points to a key factor driving the success of small businesses, both in Europe and around the globe – cloud computing…
Cloud computing: the benefits for small business
Small businesses are the lifeblood of Europe’s economic engine. Recent estimates put the number of European SMEs at more than 23m, a number that represents two-thirds of Europe’s private sector jobs, and they have sparked 80% of job creation over the past five years. Can cloud really underpin the success of such a large sector?
The cloud has faced its fair share of sceptics, but it has already transformed the way that billions of people around the world work, play and communicate. At a basic level, cloud computing is simply a way to manage data and use applications over the internet, often as a service that you subscribe to, rather than software that you buy and install. Consumers use the cloud every day when they upload pictures, send email, listen to music, or dozens of other routine online activities.
Companies, on the other hand, can use cloud computing to manage a range of front- and back-end office functions. Cloud-based solutions for businesses, often called "software as a service" (SaaS), run the gamut from accounting and human resources, to marketing and social media, and just about everything in between.
Cloud-based software is often easier to use, faster to deploy and provides far greater flexibility than on-premise solutions that need to be installed and maintained, especially for SMEs that are too small for a dedicated IT staff.
Beyond that, cloud-based software can also help small businesses lower costs, often by a significant amount. A recent survey by IDC found that almost every SME that uses cloud services saves money, with most lowering costs between 10% and 20%.
Despite these benefits, the path to the cloud has been bumpy, particularly in Europe. Due to a convoluted web of privacy laws and other governmental regulations, as well as concerns about data security, analysts estimate that business cloud adoption in Europe lags behind the US by about two years.
The numbers are even worse in the UK, where 20% fewer companies use the cloud than their counterparts on mainland Europe.
Cloud adoption: a boon to SMEs and a cure for Europe’s business woes?
Even if European companies are generally cautious about moving to the cloud, the fact remains that a large number of small businesses are already there. According to IDC, 64% of SMEs use at least one cloud-based service. That number is poised to skyrocket, especially when you consider the additional 25% of small businesses that have a concrete plan to use the cloud, or are at least thinking about it.
As more small businesses use the cloud, they stand to make big gains. With cloud-based solutions, SMEs can reinvest their time and resources into product, sales, marketing, and other revenue-generating areas. This not only makes businesses easier to manage, but makes them more efficient as well. IDC predicts that this increased efficiency will translate into global revenue increases totalling $1.1 trillion a year by 2015.
Europe as a whole also stands to gain from the widespread adoption of cloud computing. Along with increased revenue, IDC estimates that over the next three years the cloud could generate up to 14m new jobs around the world, with 1.2m of those positions located in Europe. It’s clear that when it comes to the cloud, what’s good for SMEs is good for Europe as a whole.
The future of the cloud looks bright, but it’s important to remember that cloud computing isn’t a miracle technology that will save any business that uses it. However, cloud-based software and services can be powerful solutions that offer fantastic benefits to companies – both large and small – that use them wisely. If SMEs are looking for a way to thrive in the trying economic times we’re facing, the cloud may just be their best bet.