SMBs – Steering well in rough seas

Here’s an excerpt from the May 1st Edition of Wall Street Journal :  “Like most companies, smaller firms used the global crisis to pare costs and trim inventories. They are running lean nowadays and have relatively strong balance sheets, with more cash and less debt as a percentage of market capitalization than do large companies, according to Standard & Poor’s data. Also smaller companies tend to thrive most during low-interest-rate environments, when they don’t have to pay much to get capital to fuel their growth—the very conditions that have prevailed in the U.S. for much of the past decade”.

Now this means a huge potential for the Hosted IT Services to the SMBs

Now let’s take a closer look at the SMB market and the impact of Information Technology.  According to a recent Survey from Microsoft, Small and Midsize Businesses using Hosted Services have shown better financial performance. Of the Small and Midsize Businesses that viewed IT as a critical element, 60% of them saw their revenues grow in the past 12 Months (i.e. 2009). In contrast, among the SMBs who viewed IT as insignificant, less than 29% saw an increase in revenue. Now, this is makes the point very clear that IT services have a positive impact on SMBs.

YIPPEE! – Cloud Computing

Contrary to my previous blog on ‘SMBs reaction to Cloud – A Pro/Con Analysis’ where I focused on the point that SMBs are reluctant to cloud,  I am finding this climate to be changing. According to the Microsoft 2010 index, Small and Midsize businesses are starting to see the benefits of Cloud Computing and more than 40% of respondents that used Cloud Computing technology reported a revenue rise of more than 30%. SMBs see Cloud Computing as an effective platform for IT Management, Maintenance and reduced operation cost.

How to solve the IT Requirements of SMBs effectively? – Give what they want!

Whether it is E-Mail, File Sharing, Data Backup, CRM, Website Hosting or E-Commerce, roughly ~50% – 70% of SMBs have their IT Services On-Premise and ~20% – 30% of them have it hosted and ~10% – 20% don’t have these IT Services at all. If we see Data Backup in particular, almost 71% of SMBs have their Data Backup installed On-Site and 22% of them have them hosted on a Offsite Server and nearly 7% of them don’t have Data Backup at all.

Now this being the case, if you are trying to pitch your offsite backup solution to a customer who has his present backup data on-site, it’s going to be difficult winning the customer until he completely trusts your solution. The best way to handle this situation is to propose a hybrid backup solution model, where there will be a local copy of backup data on the customer’s premises and the backed up data is then optionally replicated to an offsite server / cloud platform for additional redundancy. Online Backup Software like Vembu StoreGrid can be deployed as a Managed On-Premise Backup Solution for customers who prefer that option and the backed up data can be optionally replicated to an offsite replication server in a co-lo facility or a Cloud Platform like Amazon Web Services. This becomes a win-win situation for the SMB as well as the Service Provider as this kind of a hybrid backup model is mutually beneficial.

These research reports say one thing very clearly that Small and Midsize Businesses show greater awareness to the benefits of IT and indicates a clear path towards better financial performance for those who take advantage of IT advancements such as hosted services. The SMB market is really big and hot out there for IT solution providers or the managed service providers and what is needed is the right strategy and execution to win big.

The above post was written by Lenin Srinivasan of Vembu Technologies. Vembu Technologies is a backup software vendor whose product, StoreGrid, powers the online backup services of a large number of service providers across the globe. Besides remote backup, StoreGrid is also used for on premise backups of workstations and servers at various companies & universities.

Vembu Home is the only FREE consumer backup solution for free local backups and optional Amazon Cloud backups. Get your FREE COPY now.

Why many SMBs are reluctant to Cloud?

“Cloud Computing” – a buzz word that’s on the peak of Hype Cycle for quite some time now is still a ‘jargon’ to many SMBs and Mid Market Companies. It was interesting to see the results of the ‘cloud hosting awareness survey’ conducted by RackSpace that more than two thirds of the SMBs in US are not familiar with the term “Cloud Hosting” – Wow!

Now, two questions immediately arise in our mind. Is that the Small Businesses failed to grasp the cloud computing technology or the Cloud hosting providers done a horrendous job in marketing to that segment? I can understand why cloud hosting providers are more catered towards the ‘enterprise segment’ expecting some big deals ($$$) instead of focusing on mom and pop services which are typical of SMBs.

Now that even if the cloud hosting providers turned their flash light on SMBs and started to focus on this segment, they are faced with two big questions (barriers) that needs a fix.

1) Security and privacy concerns
2) Benefit over existing hosting service

A recent Forrester survey reveals that 51% of SMB survey respondents cited security and privacy concerns as their top reason for not adopting cloud computing yet. Small Businesses need a TRUE value proposition on why they need to move their data out of their premises and the real business value they derive out of it. These are some prime reasons on why many SMBs are still reluctant to cloud.

Why SMBs need the cloud?

BANT (Budget, Authority, Need and Time frame) is one(four) good reason on why Small Businesses need the cloud – Sounds like a typical sales pitch?

Budget – The cost of running and managing an in-house data center is increasing exponentially year by year and more than the hardware cost, it’s the support & management cost and business app cost etc… that are the real pain points. On top of it, increasing cost for the maintenance required for the datacenter, electrical power supplies, cooling, bandwidth etc… are some prime factors on why SMBs need the cloud.

Authority – When small businesses require a business app, it has to go through lots of stages especially when maintained in-house. Right from staging, development, testing, production and fail over environment, the in-house IT department will be working on lots of other items as well in order to bring up the business app. Now if there should be a technical problem with the storage devices or servers, SMBs typically don’t have the situation under control and have to rely on the hardware vendor’s technical support.

Need – SMBs usually do not have remote data centers for managing their offsite data backup requirements. Data Backup is more than a need – a mandate for running successful businesses. Businesses without proactive backup and recovery policies are likely to be OUT OF BUSINESS within 2 years of a major disaster. Replication to a cloud platform is an effective data backup and recovery strategy and helps Small Businesses to withstand a data disaster.

Timeframe – Small businesses don’t have to go through a typical two week purchase order process and additional two weeks of configuration, staging, testing etc… in order for a Business Application to be available for production use. With Cloud Computing, they can get up and running in few days and this quick process will have a profitable impact on the business.


Small Businesses have always more reasons to shift their data out of their premises and move it to the cloud. But they are reluctant and held up and what they need is the right message that “Your Data is Safe and Your Business is Protected” to get them up and running on the cloud.

The above post was written by Lenin Srinivasan of Vembu Technologies. Vembu Technologies is a backup software vendor whose product, StoreGrid, powers the online backup services of a large number of service providers across the globe. Besides remote backup, StoreGrid is also used for on premise backups of workstations and servers at various companies & universities.

Vembu Home is the only FREE consumer backup solution for free local backups and optional Amazon Cloud backups. Get your FREE COPY now.

Where is the Software Plus Services play here? Not yet. But this is the beginning of the move towards Google adopting a ‘software plus services’ strategy. Google will soon realize there are some large solution providers out there who would like to customize and host their Google Apps themselves and offer it to their customers. Additionally, there will also be large mid-market and enterprise customers (which is where most of the IT money is spent) who would like to customize their apps, integrate them with their business processes, and even host Google Apps internally and manage it themselves.  Microsoft offers on-premise, channel hosted, and Microsoft hosted solutions for their applications; Google will follow suit soon – the only thing is that Google comes into the ring from the opposite side  (of Microsoft) . In summary, no IT vendor however big, can afford to ignore a segment of the market because of some religious opposition to a business model. As Microsoft and Google start pushing their software plus services strategy, smaller vendors will follow suit.

My recent comments on an MSPMentor post: “Will Managed Service Providers Back Microsoft Exchange Online, SharePoint Online” -are quite relevant in the context of this subject…

“I think it is inevitable that Microsoft takes this hybrid approach with the SaaS model. But the market is so big there is always room for VARs and MSPs to add    value and win customers. In our experience in the SMB market segment we have dealt with two types of SMBs, the one who has internal IT and the one who     outsources it to a local VAR or an MSP. The latter segment is where VARs and MSPs have to cater to by building relationships with customers and also by becoming a trusted advisor/CIO of these small businesses.

Finally, there is no point fighting the tide. Microsoft cannot afford to cede a market segment to a salesforce.com or Google etc. So they need to do something to capture the market segment which is directly consuming applications from the SaaS vendor. That does not mean there is no value VARs/MSPs can add. I strongly believe there is probably 50% of the SMB market segment who are not comfortable with consuming business applications directly from the SaaS vendor. They would go to their local MSP/VAR who would bring in additional value so that these SMBs can focus on their core business.”

I think the complexity of IT is such that it is impossible for a large vendor to cater to all types of businesses. There is a big segment of the market that does not want to figure things out on their own and rather focus on their core business. They would rather outsource it to a trusted MSP/VAR to figure everything out and deliver a solution they could use.

In my opinion, Google is coming around to the same conclusion. Watch this space!

The above post was written by Sekar Vembu of Vembu Technologies. Vembu Technologies is a backup software vendor whose product, StoreGrid, powers the online backup services of a large number of service providers across the globe. Besides remote backup, StoreGrid is also used for on premise backups of workstations and servers at various companies & universities.

We actually do not compete with Mozy head on as our focus has been on enabling MSPs and IT Solution providers to host and offer their own online backup service to their SMB customers. Now that EMC is creating a new subsidiary, Decho, which will exclusively focus on the consumer (and the SMB ???) segment we need to take note of that and be prepared to start competing with them sometime in the future. But it is always good to have a formidable competitor. That will help us motivate ourselves to think better and work harder to make StoreGrid a better platform for our partners to offer an online backup service.

Coming back to why I am impressed with EMC! Being such a large company primarily focusing on the enterprise and mid-market segment, it would have been an execution disaster if they had tried to keep Mozy ‘in house’ and focus on the consumer/SMB segment. Chuck Hollis, EMC’s VP, Global Marketing, puts it succinctly in his blog  post – as to why this is a great move by EMC.

“I think the decision to create a separate standalone entity speaks volumes as to how EMC’s thinking has matured: this is a market that’s important to EMC, we really don’t have this sort of thing in our DNA, better leave to people who DO understand this space, and give them what they need to be successful.”

I think it is next to impossible for EMC to position themselves in the SMB market given that the company was built on a model of selling to large corporations. With a separate business which will have its own management, organization & business model, they can now be a formidable force to reckon with in the consumer/SMB market segment.

Needless to say,  we are quite positive about the general growth in the market for online backup services and our ability to do well  (in a niche of our own, at the very least) by building a great online backup platform with StoreGrid. Our recent Amazon Cloud support reaffirms our commitment to keeping you at the cutting edge of technology.

Not that we are not worried about EMC….I’d rather say that it helps to have a ‘target Goliath’ – to stay focused and put up a good fight!

The above post was written by Sekar Vembu of Vembu Technologies. Vembu Technologies is a backup software vendor whose product, StoreGrid, powers the online backup services of a large number of service providers across the globe. Besides remote backup, StoreGrid is also used for on premise backups of workstations and servers at various companies & universities.