Cloud Computing in the SME Sector

21. 01. 2013.

Even though cloud computing is a cost efficient and location independent IT solution which comes with 24 hour support, only a fraction of Hungarian small and medium enterprises uses it, reveals eNET-Telekom’s latest survey conducted among SMEs. According to the survey, a major obstacle to implementing cloud computing is lack of awareness. Only about one-third of SMEs have heard about cloud computing and just over 3% use it. Cloud computing, however, does have a future in Hungary, too: approximately 10% of SMEs plan to implement it.

The transmission, processing and storage of data have continuously improved and become cheaper, enabling enterprises to re-think their IT infrastructure. Companies can now afford Internet-based services which provide storage of files and software somewhere „in a cloud” instead of the users’ computers (hence the name cloud computing). As the applications processing data are also hosted on the Internet, operating a local server may become redundant. The services are accessed by a thin client, saving money, place and energy for companies.

Cloud computing is available at all levels of IT processes:

  • Software as a Service, SaaS. In the SaaS model, software developed by an independent provider is accessed over the Internet by users who are charged a fixed license fee. Unlike traditional software, these solutions are not installed on the users’ computers or servers. Owned by the provider, these software applications are hosted in the provider’s data centre running on its computers. SaaS includes different mailing systems, online file sharing and storage provision, complex office software solutions and recently even accounting and CRM systems.

  • Platform as a Service, PaaS. PaaS solutions are development platforms which provide development tools in a cloud to be accessed via a web browser, similarly to SaaS solutions. PaaS enables IT specialists to design web applications without installing any software on their computers. These applications may then be installed on PaaS servers without any special knowledge of system administration. The user thus is charged for using an application environment such as .NET, Java, etc. One of the most widely used providers is Google App Engine.

  • Infrastructure as a Service, IaaS. In this model, the provider offers its virtual computers in a virtual environment for a fee. This solution is sometimes even deployed within a company to ensure a better use of resources and cost efficiency. IaaS is recommended for users who do not wish to maintain any device or server but want to retain control over their software environment. For this purpose, they can hire a virtual machine from IaaS providers such as Amazon or Magyar Telekom in Hungary.

SMEs That Should Switch to Cloud Computing

Earlier surveys of eNET found that IT plays a key role for the majority of micro-enterprises and SMEs. On average, an SME needs to set up a server exclusively dedicated to its own network once the number of PCs in its IT system has exceed 10. Approximately one-third of small and medium enterprises use a server to support their IT operations. Typically, however, server supervision is outsourced to an administrator.

For companies like these, outsourcing the operation of the server and the related services can be a good idea. Any error in the system may result in downtime, losing money for a company – cloud computing can be the answer to that.

The availability of cloud computing means that providing some parts of the IT background can become a decision of „build or buy” for a company, a decision similar to „make or buy”. Enterprises must analyze their options and objectives to decide whether to manage their IT processes in-house or try outsourcing. Obviously, numerous SMEs started using a server prior to the introduction of cloud computing therefore their IT processes are based on the existence of an in-house server. Implementing cloud computing may need a more complex re-organizing of processes in their case.

According to eNET’s latest survey conducted among SMEs, the majority of companies with an in-house server operate their server onsite (a mere 5 % uses server hosting or leasing) but nearly half of them have outsourced the operation of their IT systems to a third party. In-house servers are mainly used for e-mailing, data storage and running data bases. IT plays a lesser role for companies that do not have their own server and find cloud computing unappealing. For the remaining 50% of SMEs, however, other reasons must be found for their reluctance toward cloud computing.

According to our survey, one of the key obstacles to implementing cloud computing is lack of awareness. A mere one-third of SMEs have heard about cloud computing and just a fraction of them is aware of its options and service levels (SaaS, PaaS, IaaS). Only 10% of companies familiar with cloud computing use a cloud service (a little over 3% of all SMEs!) and about 20% have plans to do so in the future. Enterprises interested in cloud computing typically have more than 20 employees and IT plays a major role in their business. Cloud computing is not used by smaller companies that have their own server but 25% of them intend to try a cloud service in the future. In their case, it may indeed be a more viable option to acquire the required extra capacities through a cloud service than build their own infrastructure and start requesting quotations for administration.

It’s Getting Clouded

In spite of the present low level of use, the share of SMEs (around 10%) planning to use cloud computing and the trends seen in the most developed countries (USA, Western Europe) can lead us to the conclusion that the use of cloud computing is set to grow among Hungarian enterprises too.

Enterprises already using cloud computing stress its cost efficiency: it’s cheaper to outsource a service than deliver it in-house by building the right infrastructure or hiring a specialist. These benefits may become more pronounced in the future while concerns about cloud computing (security risks, the lack of a proper service or the need for high-level expertise) may ease up through the wider use, improvement and possible regulation of cloud services.

eNET – Telekom

The telephone survey was conducted in November, 2012 using a national representative sample of 300 Hungarian enterprises with sales revenue of HUF 5-250 million.