SMBs Drive Need for New Cloud Partnerships, Channels

By Russell Griffin, Director of Channel Programs at Hostway

A growing trend in SMB services is opening the cloud market to a wider base of vendors – and resellers like you should take notice.

While each small business is unique, their enormous cumulative impact can be tracked in a single direction – moving toward the cloud. This shift is causing a ripple effect for the technology companies that serve them.

According to data from the Small Business Administration, the 23 million American small businesses account for 54 percent of all sales, providing 55 percent of current jobs – and 66 percent of jobs created since the 1970s. Many of these SMBs conduct business online, head-to-head with large enterprises. With the cost of technology, advertising and operations, how can they compete?

SMBs are discovering that cloud is part of the answer – the purchasing stats prove it. According to an annual study conducted by Parallels, the overall SMB cloud market in the U.S. alone will reach $32 billion by 2016, growing 19 percent year-over-year.

SMBs currently use the cloud for a variety of purposes – email, web presence, content delivery, and so on. As they are discovering the cloud’s ability to save them money, time, and resources, SMBs are also searching for the right provider to outsource their needs. In a 2013 Cloud Opportunity study commissioned by Hostway, AMI-Partners found that SMBs are overwhelmingly choosing providers they’ve already worked with. Your single Internet, phone, and cable provider probably started by offering only one of those services; SMBs are causing the same transformations on the cloud marketplace. Existing partners are expanding their offers to meet the demand for cloud services.

The cloud services SMBs are most likely to deploy fall into three categories:

  • Infrastructure-as-a-Service (IaaS): Forty percent of SMBs now use server backup, security and SQL database options, according to Parallels. Data from AMI-Partners indicates annual North American SMB expenditures on IaaS security will surpass $1 billion in 2014.
  • Software as a service (SaaS) apps: First, it was productivity tools and social media platforms. Now, add on business intelligence (BI), analytics and customer relationship management (CRM).
  • Hosted communications and collaboration solutions: Here’s where business-class email and hosted private branch exchange (PBX) telephone services come in. Complete Unified Communications-as-a-Service (UCaaS) solutions are on the horizon.

But SMBs aren’t just expecting the services: they also expect the support and reliability that their larger counterparts receive. In fact, they may require more attention, without anyone specialized to manage these day-to-day needs. Technology providers supply this by partnering with established cloud hosting providers, skipping the capex investment of building their own cloud. SMBs ultimately benefit from many perks of these relationships:

  • Bundled services
  • Unified billing
  • Utility billing
  • Guaranteed uptime
  • Responsive support

Traditional sales lines are being blurred as opportunities open for technology companies never before considering cloud offerings, but who are well-suited to add them due to their established relationships with SMBs and understanding of their technology and support needs.

For resellers, the cloud partnership model provides significant advantages. They keep control of end-user experience and branding while building a “one-stop shop” – a portfolio of services to package with your own.

To read more about what’s next for SMBs and the cloud, and see four existing cloud partnership examples, read our full-length whitepaper on the topic.