In our post-pandemic, digital world, small and medium-sized businesses (SMBs) have migrated to the cloud in droves to take advantage of the same tools and efficiencies as large-scale enterprises. Still, according to Accenture, basic cloud adoption across all businesses is at 44% globally, indicating there’s still an enormous opportunity for digital transformation in the cloud. So, what’s the hitch?
Often, SMBs are concerned with paying for more services than they need, securing and retaining the right talent, or the security of their data in the cloud. These are exactly the kinds of considerations that should be top of mind for SMB leaders.
But, let’s flip the question. What are you missing out on by sticking with legacy technology?
Cloud computing provides the flexibility to scale efficiently while minimizing costs, helping SMBs unlock future growth opportunities, innovate faster, enhance customer experiences, and generate new revenue streams. Ultimately, the cloud has become a competitive advantage—the great equalizer for companies of all sizes—particularly for SMBs.
Sound too good to be true? Here are some examples of how SMBs leverage the cloud to their advantage.
Advantages of cloud computing
- Lower and control your IT costs
- Get the most from your data
- Innovate and build new features more quickly
- Use AI and machine learning to enhance customer experience
Lower and control your IT costs
Inherently, the cloud is a powerful tool for lowering costs, eliminating the need for SMBs to buy, build, or maintain their own physical compute or storage hardware and software. Instead, businesses pay for only what they use in the cloud and can scale capacity up and down with changing needs, which can significantly lower IT costs. A 2022 IDC study found that organizations that provisioned resources in the cloud instead of in on-premises data centers achieved an average annualized reduction of IT expenditures of 25%.
Cloud infrastructure is more efficient than running those same workloads in on-prem data centers—especially for SMBs. Most on-premises data centers are underutilized, with extra hardware purchased to support peak usage. However, SMBs do not typically require the infrastructure to support peak usage for extended periods of time, and they tend to be stuck with hardware that’s barely being used, which is not cost efficient. With cloud, they can eliminate up-front capital costs associated with maintaining their own servers, like electricity, hardware, and maintenance.
By contrast, many cloud providers enable SMBs to manage, control, and optimize their spend in the cloud, offering cloud management tools that are often built-in and automated to help businesses reduce expenditure and maximize the value of their spend. For example, flexible solutions like intelligent tiering, which automates data life-cycle management and stores infrequently used data into lower-cost storage classes, help to automatically optimize your cloud spend and reduce costs.
Get the most from your data
Data is an asset for businesses of every size. Businesses across every industry and geography are generating more data than ever before. And, effectively leveraging data has become a competitive advantage—particularly for SMBs. But to use data to its full potential, you need secure, affordable tools that allow you to access and analyze that data.
Processing large volumes of data, i.e., big data, to identify and leverage unique insights is no longer exclusive to larger companies with considerable resources. A cloud-based approach provides SMBs with an affordable way to access the very latest tools to drive value from data. Instead of managing the complex and costly process of building a modern data architecture yourself, the cloud offers access to the same data technology and capabilities that large enterprises enjoy, empowering SMBs with access to fresh, relevant insights to expedite growth.
With access to data-driven insights and cloud-based data analytics, SMBs are able to improve operations and reduce operational costs, enhancing the customer experience and generating new revenue streams, which help these businesses stay ahead of the competition.
Innovate and build new features more quickly
For SMBs, the cloud not only drives operational efficiencies, but also creates opportunities to innovate and enhance products and offerings. With the cloud, SMBs can quickly spin up resources as needed to experiment and iterate more quickly and frequently.
Businesses can deploy hundreds or even thousands of servers in minutes, enabling them to rapidly develop and roll out new applications. They can test new versions of applications on exact replicas of their production environment. While this would be costly and time-consuming with on-premises data centers, the cloud enables this almost instantly and at low cost.
The cloud empowers SMBs to be more competitive in deploying new products, features, and updates, bringing innovations to market and meeting customer needs more quickly. In fact, companies that have migrated to the cloud produce three times as many features per year, according to IDC research.
Use AI and machine learning to enhance customer experience
The cloud levels the playing field for SMBs, democratizing access to the same data technology and capabilities that large enterprises are using. SMBs are now harnessing the power of AI, machine learning, and predictive analytics to transform customer experiences, which is increasingly important amidst rapidly shifting consumer demands.
For example, SMBs that operate ecommerce sites are quickly delivering personalized recommendations that target customers more accurately with machine learning-powered personalization services. SMBs are creating customer service chatbots that can answer FAQs and automate customer journeys.
SMBs are also using this technology to easily forecast accurate business outcomes and predict foot traffic, workforce staffing needs, inventory stock, and more.
Common cloud mistakes to avoid
- One size does not fit all
- Your insights are only as good as your data
- Don’t just store your data—maximize its value
- Avoid adopting technology you don’t need
- Protect yourself
While a good cloud provider will make your transition easy, it’s also important to understand what common mistakes SMBs are making, so you know what to avoid.
One size does not fit all
While the cloud can lower costs, that doesn’t mean that any framework will bring you the savings that you’re after. SMBs should pick a provider with the management tools to ensure that they’re getting the most value from their expenditure—for instance, a plan with intelligent tiering solutions and billing budgets that allow for cloud spend monitoring and guardrails.
One common mistake SMBs make is to “lift and shift” their current on-premises servers with the same compute and capacity. This is almost never needed, and a good cloud provider with a comprehensive partner network can help them “right size” into the cloud from their current, overprovisioned on-prem footprint.
Your insights are only as good as your data
Legacy data entry processes can mean years of built up errors and inconsistencies. Manual data entry, incomplete data sets, and data silos can degrade the quality of data, skewing insights and decision-making. Not using clean and accurate data to inform your decision-making can result in bad recommendations and predictions.
The cloud can play a critical role in improving data ingestion, data quality, transformation, analysis, and governance. There is a wide range of technologies that address these distinct aspects of data management, including services that can eliminate duplicate data and automatically associate categories with different kinds of data.
Don’t just store your data—maximize its value
While many SMBs are migrating data to the cloud, only 35% of them also use cloud-based analytics, according to a recent survey. This reveals a huge gap between storing data and extracting value from it.
Data analytics tools help businesses anticipate market trends, make better informed decisions, forecast and increase sales, plan improvements to existing products or services, and enhance customer experiences. SMBs can even monetize their data, packaging and selling data to existing and new customers. To get the most value from their data, SMBs need to find a cloud provider that can allow access to integrated analytics stack and a mature set of analytics tools, right-size their data strategy to their specific needs, and provide support through every step of the data journey.
Avoid adopting technology you don’t need
As tempting as it is to take advantage of the latest and greatest new technologies, you could wind up paying for bells and whistles that aren’t contributing to your bottom line. Not every SMB needs natural language processing to improve its product.
While SMBs are harnessing advanced technology like generative AI, adoption of this technology should be tied to a clear business need—not just a desire for a shiny new toy. Your cloud provider should help you work backward from your business needs and find the tools to help you achieve your goals.
Protect yourself
Many SMBs lack the staff and expertise to maintain and monitor their security resources continuously when threats are constantly evolving. While you may feel more secure knowing exactly where your servers are, the cloud offers 24/7 security and infrastructure monitoring to keep your data safe from all kinds of dangers, be they bad actors or everyday bad luck.
We recommend relying on the expertise of a cloud provider that can source IT service partners with security competencies that conduct assessments, remediation of findings, deploy cybersecurity applications, and establish best practices. Ideally, security partners that provide 24×7 security protection and monitoring of resources delivered as a fully managed service.
Claire Gribbin is head of worldwide SMB segment strategy at Amazon Web Services.
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