SME solutions in the Cloud

Arthur Goldstuck, MD of World Wide Worx and principle researcher in the 2015 SME Survey
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The small and medium enterprise (SME) sector in South Africa is a vibrant and expanding part of the economy. Today we are seeing an encouraging trend as more SMEs become aware of the benefits they can derive through the use of Cloud technology.

The SME Survey 2015 done by Standard Bank and World Wide Worx shows that from 2014 to 2015, the number of SMEs making use of Cloud services has jumped by 10% to around 39% in total. Today, many SMEs might be surprised to find out that many of the e-mail services they use (which the report indicates is used by approximately 83% of SMEs) is also a form of Cloud technology.

Ethel Nyembe, Head of Small Enterprise at Standard Bank, says it is encouraging to see quite a number of SMEs being open-minded about adopting sustainable practices into their business operations. “Now that SMEs understand the importance of sustainability and environmental responsibility, more needs to be done to help them incorporate these sustainable practices into their core business processes, regardless of their sector. Furthermore, implementing sustainable business practices will give SMEs competitive advantages when dealing with larger corporates which now prefer suppliers that complement their sustainability objectives,” she says.

According to Nyembe, Cloud-based products can provide small and medium business owners with efficient, simple and cost-effective business management solutions, thus saving the enterprise time and money, which is vital for prosperity. “For example, cloud-based HR applications are more economical than tailored in-house systems, as they involve no upfront costs and are adaptable, thus giving the entrepreneur the time needed to focus on innovation,” she says.

The biggest challenges

Arthur Goldstuck, MD of World Wide Worx and principle researcher in the 2015 SME Survey, is a well-known journalist, analyst and public speaker on the latest tech trends. According to him, the biggest challenges for SMEs, based on their research which spans more than a decade, are finding the right staff and the right skills, and managing the increasing complexity of IT.

“The last issue [complexity of IT] begins to disappear the more one embraces the Cloud. By using virtual computing, for example, one does not have to worry about how to choose the right hardware and networking infrastructure for one’s needs. One does not have to worry about scaling up as one’s needs grow. One does not have to worry as often about software upgrades and licensing issues, and obsolescence becomes irrelevant,” he told Opportunity.

Many businesses are often entangled in what has been referred to as an ‘IT mess’. As Goldstuck explains, this mess is precisely what the Cloud assists SMEs to address. He says not only are fewer machines like servers and backup storage devices needed, but it becomes possible to identify new services, options and possibilities when one can simply select them from the Cloud.

Goldstuck says today, the most popular Cloud services used by businesses in South Africa (according to the survey) include online banking, online email, online accounting, and online storage. He says when it comes online storage, it is far more secure than physical storage since it is usually mirrored across a number of data centres, meaning that there is little chance of accidental data loss.

On the other hand, he says physical storage is prone to damage, theft, data corruption and loss due to natural disasters. He says most people who rely on physical storage have an experience of data loss as a result of the aforementioned or something similar. Online storage can be hacked according to him, but this is far less likely than the real physical danger faced by physical storage.

Cloud technology

There has however been apprehension by SMEs in the past when it comes to the use of Cloud technology. Goldstuck says there has been three main reasons SMEs have avoided the Cloud: they don’t understand it, they are afraid of it and they don’t see a need for it. “Once they become educated about it, all of these reasons disappear.”

There has been noted to be a difference in what is generally perceived as Cloud technology and what it actually encompasses. Goldstuck says there are three primary forms of Cloud, namely public – which anyone can sign onto online; private – which is a dedicated space that only the company owning that space can access; and hybrid – a combination of the two.

“There is also a lot of talk about the Dark Cloud, which is cloud services that members of staff purchase by credit card and are not reflected in a company’s Cloud investment. With the SME Survey 2015 we identified the Invisible Cloud, which is companies using cloud services without realising they are using the Cloud. Online email and storage are the best examples,” he says.

So how can Cloud technology be financially beneficial to SMEs? According to Goldstuck, there is massive potential savings to be had by using the Cloud instead of physical equivalents. He says at the same time, by using the Cloud, companies can become more flexible, enabling them to become more competitive and profitable.

Looking at the promotion and advancement of Cloud technology both locally and on the rest of the continent, he says, “The most important point we make in the SME Survey 2015 is that vendors must sell specific applications that use the Cloud, rather than trying to sell the Cloud in its own right. That way, people begin using the Cloud for specific purposes without having to be convinced of its broad benefits.

SA ahead in Africa

“South Africa is well ahead of the rest of Africa in terms of reliability, but behind Nigeria in terms of the level of use. However, we are constrained by poor broadband infrastructure, which is now becoming more important than security concerns as an obstacle to cloud uptake. This is a non-issue in major industrial markets.”

When asked about additional benefits SMEs can derive from Cloud technology, Goldstuck says the more one’s processes, applications and data can be accessed from the Cloud, the less one is constrained by one’s physical location. He says, no matter where you are in the world, as long as you have a device that can access the Cloud, you are also in your office.

“In future, it will seem absurd not to use the Cloud, equivalent to insisting on physical faxes and signatures at a time when all documentation can be exchanged electronically. That is still common, but marks a company as being uncompetitive and inflexible. The concept of having to print out an e-mailed document, sign it and scan it back to return it is quite absurd, yet some of the biggest corporations in the world still insist on it.

“Typically, they are complying with the requirements of lawyers and accountants, but the real issue is not compliance, it is an inability to embrace more effective solutions because of being used to doing things in the same old way. It is really complacency rather than compliance, and that is going to allow small, nimble and Cloud-friendly businesses to take massive market share from the big players,” Goldstuck concludes.


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