SMBs make optimum use of cloud to improve chances of better market access and profitability

In a study to measure the social and economic impact of cloud usage among 275 SMBs across 11 Indian cities, Microsoft and the Thought Arbitrage Research Institute (TARI) found that small- and medium-sized companies (SMBs) improved their chances of better market access and profitability by three times with high use of cloud technologies. The study captured data showing significant increase in market reach, improvement in employee productivity and operational processes, and an improvement in work-life balance as a direct correlation of increased cloud usage. CEOs in SMBs said the use of cloud technologies helped their companies with the flexibility of technology usage and by extension in carrying out business operations. They also said that cloud technologies have helped them better control over business and people processes.

The study has, through a regression-based approach, established an empirical relationship predicting probability of impact on socioeconomic indicators in relation to change in the level of cloud adoption. Overall, the study suggests that there is a greater than 75% possibility that an SMB adopting cloud will see improvement in different metrics within a period of two years of being on the cloud.

Anant Maheshwari, President, Microsoft India, said, “The CEOs of these companies have seen the positive value and high impact of cloud technologies in transforming their businesses. The findings of this study reiterate the power of digital transformation. At Microsoft, we are deeply committed to empower every organisation and every individual to achieve more. We are partnering organizations in their unique transformation journeys, with each one contributing to an ecosystem of innovation led growth.”

Reduction in operating expenses and improvement in cash flow is seen to be a significant benefit of cloud adoption. SMBs can have improved cash flows of up to 308% due to the dexterity and flexibility enabled by cloud usage. 96% of SMBs find a positive impact on their operating expenses within two years of cloud use, which remains stable with time. Security, business continuity and risk management are other areas of importance. 86% of SMBs believe that cloud is a secure platform and that they experienced less risk of loss of confidential information.

A very key aspect is the personal development that is experienced by the SMB owner. With greater work-life flexibility, SMBs showed a movement towards personal development as well. While there was no conclusive evidence of upwards social mobility, there was a definitive heightened focus on employee development. Around 94% of SMBs had an increase in number of skilled employees, with less investment, within two years of high cloud usage. They were also willing to invest more in their upskilling and overall development, which in turn also led to higher retention.

impact across industry sectors

The study also evaluated benefits across industries in which SMBs operate. The manufacturing SMB sector, although lagging behind currently on high cloud usage, demonstrates the maximum predicted impact within two years of cloud adoption. Retail/Trade, IT/ITeS, Education, Health and Hospitality sectors are early adopters and already reaping benefits.

Ratification with Government Database

The survey also evaluated SMBs utilizing cloud computing with a government database of MSME companies which are not utilizing any cloud computing service, and has found the following:

· Profit improvement/cost reduction metrics: SMBs adopting medium level of cloud services show a 30% improvement, compared to MSMEs on the database which shows a 10% improvement.
 

· Asset utilization metrics: SMBs adopting medium level of cloud services show a 50% improvement, whereas MSMEs on the database show marginal improvement.
 

· Employee productivity metrics: SMBs adopting medium level of cloud services show a 50% improvement, compared to MSMEs on the database which show a 20% improvement.