APAC SMBs see gain and pain in cloud computing

by Sohini Bagchi    Feb 22, 2013


Cloud computing has already entered the vocabulary of a greater number of small and mid-sized businesses (SMBs) today. Some analysts believe that the cloud market, especially the Asia Pacific SMB cloud services will expand in the coming days. However, many in the enterprise and some industry reports suggest a sharp paradox in cloud adoption practices stating that even though the market is set to expand, SMBs in this region are still wary about how their businesses can be benefited from the cloud.

Areas of gain
A latest report by Parallels reveals that the Asia Pacific SMB cloud services market opportunity will grow at a CAGR of 38 per cent to reach $19.8 billion in 2015, as per a new industry report by Parallels. In 2012, this market was worth US$7.6 billion, and both India and China will continue to be the leading growth markets for cloud services in the coming years.

According to Birger Steen, CEO of Parallels, there is a growing appreciation that cloud can support newer ways of working and in turn has provides greater efficiencies to small and midsize businesses as well as a competitive advantage.

“More and more small and mid-sized businesses today are using software-as-a-service (SaaS) to add value to their business. The other area SMBs see potential is cloud analytics, which will grow in the coming months,” he says.

There is certainly more traction in the Asia Pacific region as the Parallels report also indicates growth in global market for SMB cloud services as it is expanding at a 28 per cent CAGR and will reach $95 billion by 2015. About six million SMBs entered the cloud market in 2012 and globally, the cloud services market grew to $45 billion during the same period.

The pain points
However, even though cloud is becoming a preferred option for APAC SMBs, some analysts and CIOs believe that the APAC SMBs are still wary to adopt this technology. “There are concerns about security and where and many small businesses are quite unsure about the contracts for cloud services. Many enterprises find a mismatch between their expectations and terms of contract offered by vendors,” says Debasis Nayak, CIO, Asian School Of Cyber Laws.

The legislation is also too weak to support the fast moving world of technology. Take for example in India, the government has set up committee to recommend framework for cloud computing services, however its one-size-fit-all concept makes it difficult to draw up standard contracts.

Although APAC SMBs are showing interest in cloud technologies because it results in reduced costs and the scope to be innovative, a lack of understanding often hampers deployment. “Some smaller firm in Asia that have heard about the potential benefits of cloud services, but they do not have an idea how they can effectively leverage the technology. Unless they get the right education and training by the vendor, the gap will always remain,” cautions Rishi Agarwal, CEO of Arvan Technologies.

Parallels report shows that 50 per cent of SMBs are ready to pay more for increased storage. Steen points out CIOs in this segment are looking for web hosting, email, security and backup in their cloud offerings. The trend is already prevalent among the US small business segment and will catch up in the APAC region by 2015.