SMBs more interested in cloud than big businesses? Just a myth, Forrester says

Enterprises with at least 1,000 employees are more interested in cloud-based virtual servers than companies with fewer employees, Forrester Research says in a new report.

Twenty-five percent of enterprises are using or plan to use hosted, pay-per-use virtual servers, such as those offered by Amazon’s Elastic Compute Cloud. Hosted virtual servers are in the plans for 18% of midmarket companies (those with 100 to 999 employees) and 15% of small businesses (6 to 99 employees).

The findings refute the stereotype that small- and medium-sized businesses are more likely to embrace cloud infrastructure-as-a-service offerings, Forrester analyst Frank Gillett writes in the report, “Conventional Wisdom is Wrong about Cloud IaaS.” 

Forrester found a “crude correlation” between the size of a company and its interest in hosted virtual servers. “This contradicts the conventional wisdom that because smaller companies lack IT skills, economies of scale, and cash for IT investment, they will be more interested in external service providers such as IaaS than larger companies,” Gillett writes. “We believe this is because larger firms are more tuned into many new IT trends and are further along in adopting x86 server virtualization, which is a prerequisite enabling technology for compute-as-a-service, whether internal or external.”

Most enterprises that plan to use hosted virtual servers from an external provider haven’t actually done so yet, but the level of interest illustrates that this market could grow quickly.

“Though most of these firms are still planning for – rather than using – virtual servers at an external service provider, this is an impressive number for an offering that just emerged in the past two years,” Gillett writes. Among enterprises that have purchased or have budget plans to purchase external virtual server capacity, about one in five have already done so.

Large companies also report being more interested in getting virtual server capacity from external providers than in building internal cloud networks that provide pay-per-use virtual servers to their own end users. This again refutes the conventional wisdom that “enterprises will be more interested in building ‘internal clouds’ of service-based compute capacity than in buying from a service provider,” Gillett writes.

Twenty-two percent of enterprises reported deploying or planning to deploy an internal cloud, while 17% of midmarket firms and 10% of small businesses reported having such plans. In all three size categories, companies are more interested in acquiring hosted virtual servers from commercial vendors than in building private clouds.

Forrester surveyed hardware decision-makers at 962 enterprises, 741 midmarket companies, and 577 small businesses, in North America and Europe.

Most companies that are embracing either hosted virtual servers or internal clouds are not planning to use both. Out of 602 companies of all sizes with infrastructure-as-a-service plans, 41% plan to use both the hosted model and the internal model. Thirty-five-percent plan to go with a service provider only, and 24% plan to build an internal service only.

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