MSP Cloud

SMB Cloud Services Spending to Increase to $615 Million by 2015

By Erin Harrison
Executive Editor, Strategic Initiatives

Service providers including telcos, MSPs and hosting companies are well positioned to become an important route to market (RTM) for small and medium-sized businesses adopting cloud solutions, according to a recent industry report.

In emerging markets, such as China, India, Brazil and Russia, SMB cloud services spending and investments through service providers will increase nearly six-fold from $111 million in 2011 to $615 million by 2015, representing a four-year annual growth rate of 54 percent, according to AMI-Partners’ recently released 2011 Route-to-Market Opportunity Model. The research firm said this figure is the largest among all RTMs tracked by AMI and far outpacing the growth in total SaaS (News - Alert) spending over the same period.

“Service providers in emerging markets will gain considerable market share in the cloud services space, due to several key factors, according to Rohan Bose, associate for AMI’s Channels Practice

“The first is due to mergers and acquisition activity within the channel landscape. Larger telcos and service providers are in the process of acquiring smaller VARs and local channel partners/resellers,” Bose explained. “The acquisition of these partners allows service providers to diversify their product portfolios and enter the cloud market by providing basic SaaS solutions (such as accounting, business intelligence/analytics, email and CRM).”

Bose said diversification is an important step for many telcos and MSOs, since many believe that their traditional offerings such as voice, data and video services will begin to enter a phase of modest growth over the next couple of years.

“Cloud services allow service providers the ability to meet the growing SMB demand and differentiate themselves from other competitors,” Bose added.

The second factor for the forecasted increase in service providers’ share is their ability to bundle SaaS solutions with broadband and high-speed Internet connectivity, Bose said.

While cloud providers such as channel partners can bundle multiple SaaS applications together, cost-conscious SMBs are more likely to purchase bundles containing broadband, according to Bose.

“As the demand for cloud services continues to rise, SMBs in emerging markets will require access to high-speed internet to increase business efficiency; it is the service providers who are uniquely positioned to offer such packages,” Bose said.

According to AMI, many service providers offer data centers and hosting capabilities to SMBs looking to store infrastructure externally. “Similarly, SPs can offer datacenter hosting to traditional channel partners such as VARs for the same reason. Other channel partners who require space to host their own apps often turn to SPs to meet their needs. AMI studies have shown strong interest by channel partners to partner with SPs for hosting needs and it is up to the SPs to foster and grow the relationship,” AMI officials said.

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