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Midmarket use of public cloud computing is fueled by company growth

Midmarket companies' growth and their desire to give customers remote access to business applications are fueling the adoption of public cloud computing resources.

Public cloud computing poses the same threats to midmarket businesses as to enterprises -- security, availability, vendor lock-in, etc., plus another biggie: They can't afford not to use the public cloud, according to experts. Why? Because everyone else is doing it.

Between 70% and 85% of midmarket firms expect to move major applications into the cloud in the next 12 months, and nearly half have already done so, according to a survey of 1,000 midmarket IT executives by Bethesda, Md.-based MarketBridge Inc.

Researcher IDC in Framingham, Mass., meanwhile, projects worldwide spending on cloud computing infrastructure and services to reach $44.2 billion in two years, up from $17.4 billion two years ago.

"The main trigger to spark cloud adoption is company growth," said Tim Furey, chairman of MarketBridge, a provider of technology-enabled solutions for sales and marketing to Fortune 1,000 and emerging growth companies. Companies that need to invest in more IT capacity see the public cloud as viable, Furey said. In fact, businesses growing at a rate of 10% or more per year are twice as likely to move software and infrastructure to the cloud, he said.

Aquent LLC, for one, is a worldwide midmarket company that had "a really busy year, rolling out a cloud infrastructure," said Larry Wollack, CIO of the Boston-based marketing and design staffing firm. Aquent put a custom-built ERP solution onto Amazon's cloud, signed on with Google Inc. for email and moved its phone system in North America into the cloud.

"The keyword is agility," Wollack recently told a group of information managers. "I was skeptical of cloud services a year ago. But we can switch server configurations on Amazon in 15 minutes. Office moves used to be a real hassle. Now, all our offices run on the Internet. We put a connection in the new space, tell the people to take their phones and routers, and give us a call when they move into the new space."

The keyword is agility. I was skeptical of cloud services a year ago. But we can switch server configurations on Amazon in 15 minutes.

 

Larry Wollack
CIOAquent LLC

Another keyword is mobility, with 38% of respondents to the MarketBridge survey saying they plan to make cloud-based business services available to customers using smartphones and other devices. This public cloud computing trend is popular in the banking industry, as regional banks like Sun National Bank in Vineland, N.J., differentiate themselves with mobile banking services.

"We wanted to be ahead of the curve before our customers demanded [the mobile channel], so we partnered with a cloud platform provider to assist with the delivery," said Angelo Valletta, CIO of Sun National. The bank chose mFoundry Inc. in Larkspur, Calif., which works frequently with financial organizations, to provide Short Message Service texting for account information inquiries, browser access to its website from Internet-enabled phones and personal digital assistants, and an application that customers can download to their PDAs for one-click access to its site.

Distribution via public cloud computing

Public cloud computing will be a critical part of the midmarket infrastructure -- and not just on the back end. "The functions or workloads that will move to the cloud early, we found, aren't around finance and ERP," Furey said. "It's all go-to market, sales, customer service."

Marketing and sales are the most accepted cloud applications for midmarket companies, the MarketBridge survey said. Thirty-six percent of companies using marketing automation do so in the cloud, and 29% of CRM is cloud-deployed. More than 49% of companies plan to move more of their sales and marketing applications into the cloud in the next year.

While security remains a concern, 48% of the IT executives responding to MarketBridge's survey said they believe security would be better in the public cloud. "It can be more expensive and more difficult to do it yourself," Furey said.

Let us know what you think about the story; email Laura Smith, Features Writer.

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