SMBs reported significant improvement in several social and economic parameters in direct correlation of increased cloud usage
In a study to measure the social and economic impact of cloud usage among 275 SMBs across 11 Indian cities*, Microsoft and the Thought Arbitrage Research Institute (TARI) found that small and medium sized companies (SMBs) improved their chances of better market access and profitability by three times with high use of cloud technologies. The study captured data showing significant increase in market reach, improvement in employee productivity and operational processes, and an improvement in work-life balance as a direct correlation of increased cloud usage. CEOs in SMBs said, the use of cloud technologies helped their companies with the flexibility of technology usage and by extension in carrying out business operations. They also said that cloud technologies helped them better control over business and people processes.
The study has, through a regression-based approach, established an empirical relationship predicting probability of impact on socio-economic indicators in relation to change in the level of cloud adoption. Overall, the study suggests that there is a greater than 75% possibility that an SMB adopting cloud will see improvement in different metrics within a period of two years of being on the cloud.
Anant Maheshwari, President, Microsoft India, said, “The CEOs of these companies have seen the positive value and high impact of cloud technologies in transforming their businesses. The findings of this study reiterate the power of digital transformation. At Microsoft we are deeply committed to empower every organisation and every individual to achieve more. We are partnering organizations in their unique transformation journeys, with each one contributing to an ecosystem of innovation led growth.”
Reduction in operating expenses and improvement in cash flow is seen to be a significant benefit of cloud adoption. SMBs can have improved cash flows of up to 308% due to the dexterity and flexibility enabled by cloud usage. 96% of SMBs find a positive impact on their operating expenses within two years of cloud use, which remains stable with time. Security, business continuity and risk management are other areas of importance. 86% of SMBs believe that cloud is a secure platform and that they experienced less risk of loss of confidential information.
According to Selva Ramanujan, Director, MontBleu Technologies, on their experience with cloud technologies, “Online productivity and collaboration tools are a very good solution for SMBs. They allow us to focus on business and not waste funds on acquiring or upgrading IT assets; we can divert the funds to core business activities. Also, upkeep and maintenance of an on-premise solution requires more funds on manpower and other overheads. Security has to be beefed up literally every day to safeguard our information if we use our own datacenters. All of this is not a problem anymore as our mails and files are saved on the Cloud.”
A very key aspect is the personal development that is experienced by the SMB owner. With greater work-life flexibility SMBs showed a movement towards personal development as well. While there was no conclusive evidence of upwards social mobility, there was a definitive heightened focus on employee development. Around 94% of SMBs had an increase in number of skilled employees, with less investment, within two years of high cloud usage. They were also willing to invest more in their upskilling and overall development, which in turn also led to higher retention.
Commenting on his experience, Dr. Senthilkumar U, Founderk & CEO, Bioline Laboratory, said, “Moving to Cloud is the best solution if you require IT infrastructure for running your business. Since adopting Cloud technologies few years back, we have decreased our capital expenditure in accumulating high-end hardware and resources. Data availability is ensured with service level agreements and we have access to the same IT infrastructure and suite of services that large companies have, which allows us to compete better. Bioline is looking forward to a huge growth enabled by the Cloud.”
Impact across Industry Sectors
The study also evaluated benefits across industries in which SMBs operate. The manufacturing SMB sector, although lagging behind currently on high cloud usage, demonstrates the maximum predicted impact within two years of cloud adoption. Retail/Trade, IT/ITeS, Education, Health and Hospitality sectors are early adopters and already reaping benefits.
Ratification with Government Database
The survey also evaluated SMBs utilizing cloud computing with a government database of MSME companies which are not utilizing any cloud computing service, and has found the following:
· Profit improvement/cost reduction metrics: SMBs adopting medium level of cloud services show a 30% improvement, compared to MSMEs on the database which show a 10% improvement.
· Asset utilization metrics: SMBs adopting medium level of cloud services show a 50% improvement, whereas MSMEs on the database show marginal improvement.
· Employee productivity metrics: SMBs adopting medium level of cloud services show a 50% improvement, compared to MSMEs on the database which show a 20% improvement.
Details of the Study
The study outlines six areas of impact across low, medium and high cloud usage^:
· Productivity and profitability improvement
· Enhanced customer engagement
· Increased competitiveness through better market access
· More secure business
· Increasingly efficient operations
· Personal and societal development
Taking a mathematical average of the impact indicators, there is an overall 3.2X predicted probability of impact across the larger population of SMBs in India for high cloud usage. The observed actual impact on the sample population has been an average of 266%.