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Smaller Businesses Have IT Envy, See SaaS As Solution  [ ]
October 31, 2008 05:28 PM
Posted by Benjamin Tomkins Thursday, Oct 30, 2008, 11:54 AM ET

How do smaller businesses use and manage IT? Not surprisingly, smaller organizations struggle to compete with larger enterprises and often don't know how to gain access to the high-quality IT services that could offer competitive parity or advantage. But hosted services may open doors previously closed to smaller organizations.

Despite the challenges that smaller businesses face, the majority of them reported good performance in the past year according to the October 2008 Microsoft Global Small Business Index, a study conducted by Vanson Bourne on behalf of the software giant. In the past year:
39% of businesses reported growth
36% of business reported stability (i.e., no growth, but no decline)

More than 1,300 businesses from around the world participated in the study conducted between May and July of this year. The timing prior to the Wall Street meltdown and the sizable non-U.S. representation in the sample size, makes the relevance of the economic views in the report questionable.

However, the timing and sample don't erode the importance of the small business outlook on IT opportunities and disadvantages. For smaller companies that perceived disadvantage may be most acute in the U.S. where 9% don't have any IT. By contrast, only 3% of Russian small businesses lack IT.

Some smaller companies may believe that small is the new large, but 79% remain convinced that larger enterprises wield a significant competitive advantage because of access to better IT resources. Grabbing an opportunity to promote its own software, Microsoft provides the following counterpoint to this finding:

"Despite this, 37% still use Web mail, such as Hotmail, Gmail or Yahoo! services, rather than business e-mail services such as Microsoft Hosted Exchange."

The number of business owners specifically coveting Exchange as the solution to their competitive deficit was not included in the findings. What was captured is the value that smaller businesses see to professional communications -- Exchange or not -- for customer service and managing relationship: 89% said it was important.

But what about SaaS as a solution to the IT envy? According to the study, 65% are open to buying IT services on a subscription basis.

"Despite their varying businesses and greatly differing needs, many small businesses are becoming increasingly dependent on information technology and the Internet for networking, communications, and sales. As they become more Web-savvy, we're seeing that small businesses are starting to seriously consider hosted services to meet some of their IT needs," said Microsoft's John Zanni. "At this time of economic uncertainty, the benefits of buying IT services on a subscription basis become ever more apparent."

This finding, of course, dovetails nicely with recent announcements from Microsoft, most notably the launch the cloud-computing platform Azure. Redmond smells opportunity.

"Today, using hosted software and services is an efficient way of getting high-quality and professional communications services at a predictable cost without the need for upfront investments or time-consuming implementations or maintenance. As businesses can pay on a per-user, per-month basis, they can greatly reduce the cost, while still gaining enterprise-grade professional communications services such as mobile e-mail," said Microsoft's Michael Korbacher. "As small businesses become more and more Internet-literate, the case for using software online will drive strong demand for service providers."