Dell Study Finds Small Business Cloud Apps on the Rise

By Kenneth Corbin | Posted March 06, 2012

Today, Dell released a new study analyzing the SMB cloud computing market. The results indicate that small and mid-sized companies are flocking to the cloud in ever-greater numbers, trusting a growing volume of business processes to remotely hosted applications.

"There's a sea change going on in the marketplace first of all. The number of cloud applications SMBs have adopted has doubled in the last two years," said Bill Odell, senior director of marketing with Dell Cloud Business Applications.

The report found that SMBs favor a cloud application model where they do business with one trusted firm. This model helps overcome logistical challenges, such as systems integration and training, while eliminating the headache of dealing with multiple service-level agreements.

For its study, Dell commissioned Techaisle to canvas 400 small businesses that had already deployed at least one cloud application. The respondents indicated that they plan to roll out three new cloud apps this year, making an average total of seven business processes SMBs expect to operate in the cloud. In 2010, small businesses reported an average deployment of just two cloud computing business applications.

Respondents cited an array of benefits they enjoy with the cloud, including a lower total cost of ownership, improved productivity, and exposure to a set of capabilities that traditionally have been reserved for enterprise customers.

For smaller firms, the journey to the cloud typically starts with the front-office operations. "CRM is the most broadly adopted business application within small business," Odell said.

Dell refers to CRM as a "gateway" app that commonly lays the groundwork for shifting other critical business processes to the cloud. Fifty-five percent of the survey respondents said that they are using a cloud-based CRM application, up from 34 percent in 2010.

After CRM, small businesses often look to move other front-office applications to the cloud, such as automated email marketing campaigns and lead generation, according to Odell.

Analytics, Odell said, is "one of the very top applications that SMBs want." Many smaller firms have expressed frustration that their market is underserved by the enterprise-class analytics applications that are currently available.

That condition has left SMBs with little in the way of sophisticated insights into the health of their business and -- according to Odell -- many firms he's met with continue to rely on spreadsheets for their analytics operations. "Something we affectionately call blood, sweat and Excel," he quipped.

Other functions that small businesses have expressed broad interest in taking to the cloud include project management and human resources functions such as payroll, benefits and applicant tracking.

Though the survey was prepared independently and its participants drawn from Techaisle's customer panel, it will nonetheless serve as a marketing tool for the cloud business that Dell is trying to expand. Dell introduced its Cloud Business Applications suite last August, announcing an expanded partnership with Salesforce.com, through which the companies will offer an integrated CRM solution geared for SMBs.

For Dell's part, the company is pursuing a dual strategy of offering co-branded applications through partners like Salesforce.com while building out its own suite of cloud services, in some cases through acquisitions, such as the November 2010 purchase of the cloud-integration platform Boomi.

"We will partner with people where we feel partnering is the right strategy. And we will make strategic investments," Odell said.

He indicated that Dell plans to round out its portfolio of cloud services and applications beyond CRM, a roadmap that will see a further expansion of the partnership with Salesforce.com, as well as support for apps from other established providers and offerings that Dell develops in-house, including a forthcoming analytics product for SMBs.

Much of Dell's value proposition turns on the back-end support for businesses that are setting up cloud deployments and trying to integrate them with their existing, on-premises systems. That vision anticipates a demand for a comprehensive offering of applications and services that the new study seemed to validate.

Sixty-nine percent of respondents expressed the preference to buy their cloud apps from a single source and close to 50 percent noted the challenges of maintaining multiple SLAs and the frustration of explaining their business needs to numerous vendors.

"Small businesses are really looking to find an IT partner -- someone who can help them pull all of this together," Odell said.

The survey also highlighted the strong role that small business CIOs and IT decision makers play in the migration to the cloud, with more than half of the respondents saying that IT, rather than the business side of the house, is the driving force behind cloud applications.

Kenneth Corbin is a freelance writer based in Washington, D.C. He has written on politics, technology and other subjects for more than four years, most recently as the Washington correspondent for InternetNews.com, covering Congress, the White House, the FCC and other regulatory affairs. You can find Kenneth on LinkedIn.

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