Only 2 pc MSMEs aware about cloud computing: Study

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Saurabh Gupta | 30 Oct, 2013
Only 2 percent micro small and medium enterprises (MSMEs) are aware about 'Cloud Computing' and interestingly out of that only 4 percent units are adopting cloud services, said a CII-IMRB research paper.

And is this not interesting that a sector (MSME), which is contributing over 8 percent to India's GDP, employing an estimated over 8 crore people spread over 3.6 crore enterprises, only 2 percent are aware about cloud out of which the ratio of companies adopting cloud services is just about 4 percent.

According to the paper, higher awareness is observed in the top 4 cities owing to higher exposures to the conversations happening around cloud in these cities; Such MSMEs are also more open to adopting technology for their business and do not mind paying a premium to get the best of breed solution for themselves.

J Satyanarayana, Secretary, Department of Electronics & Information Technology unveiled the CII-IMRB joint Research Paper 'Adoption of Cloud in MSMEs' at CII Cloud Summit 2013 event held on 29th October in New Delhi.

CII-IMRB research paper documents the adoption of the Cloud services in India by MSMEs, trends observed in this space and the process that MSMEs should follow for selecting right vendors for Cloud Services.

The CII-IMRB Cloud Report involved face-to-face interviews with over 8,000 respondents across 22 cities in India. The respondents were primarily the IT Decision makers or Heads responsible for IT function in the organization. The research discussed in-depth questions pertaining to Cloud services perception among MSMEs, Adoption of Cloud services, Challenges and Solutions as a part of the study.

It also highlights that the MSMEs look at cloud as an innovative concept and have concerns around data security, especially in businesses like IT/ ITES and BFSI and therefore further enabling environment and awareness needs to be built.

Speaking on the release Puneet Avasthi, VP & Head, BIRD Business Unit, IMRB International said, "MSMEs offer significantly large headroom for growth to the cloud service providers. However, for this to happen, it is important for the service providers to offer a complete solution designed for the MSMEs, which makes the offer more tangible and actionable for the business."

"This is currently lacking in the market which does not give the MSMEs the confidence to invest. There are several successful cases of cloud solutions being leveraged effectively by MSMEs to further their business."

"Several MSMEs have already moved some of their non core functions to the cloud and are reaping benefits of lower CAPEX and higher uptime, which is helping them focus on their business growth," Avasthi added.

The study highlights various key factors that play an important role in influencing the IT strategy on Cloud adoption amongst the MSMEs.

Manufacturing vertical leading the Cloud Services adoption
Key functions being outsourced includes Sales & Marketing
Perception of Cloud Computing deferscity-wise and industry verticals

MSMEs should take a five step approach to cloud adoption starting from Public Cloud to Non-mission critical activities

Adopt public cloud based web hosting services
Evaluate the Cloud Services for a short period of Time
Migrate Email & Collaboration Services
Evaluate the services & vendor
Migrate Non-mission Critical data to Public Cloud.

Some of the other findings of the study indicate the following:

Triggers for adoption of Cloud Computing:
o       Effective hardware utilization emerges as one of the key reason for adopting cloud computing solutions. This seems to be more prominent among smaller SMEs; this could be because they would like to best use their existing hardware and reduce their bottom line expenses. On demand stability and Device independency is also seen as other critical triggers for adoption of cloud computing.

Areas of Business that have been moved to Cloud
o       Technical Operational data which is non-sensitive in nature is the most common operation that has moved on the cloud. HR related data has also been moved on cloud among MSMEs with 1-10 employees.

Concerns in Cloud Adoption
o       Data Security is arguably the biggest concern many SMEs have. This becomes more predominant when we look at the SMEs who work on the customer data or have sensitive data that they would not want their competitors to have access to like IT, BFSI, Education or those who may not have dedicated IT personnel.

Pitfalls to be avoided while choosing a Cloud Vendor.
o       MSMEs should be careful in choosing the set of cloud vendors. They should go for vendors who offer bundled service - Applications that spans across business lines and helps consolidate the IT process in the business.

Also according to another report on 'Unleashing the Potential: Internet's Role in the Performance of India's Small and Medium Enterprises (SMEs)' by FICCI and Google India, fewer than 5 percent of all businesses even maintain a web presence.

For India's economy; SMEs are critical to the economic growth in India, on an average, web-enabled SMEs boasted of revenues 51 percent higher, 49 percent more profit, and customer bases 7 percent broader than their offline counterparts.

According to the report, only 51 percent of online SMEs use the web to advertise a mere 27 percent use it for e-commerce. But with 95 percent of businesses yet to even establish a website; India is poised for big gains as more small enterprises come online.