SMEs Using Hosted Services Have Better Financial Performance

Microsoft has released its global SME IT and Hosted IT Index 2010, which investigates how small and mid-size enterprises (SMEs) across multiple segments fared during the recession and how they use technology. The research finds that businesses that value IT as an enabler for better business productivity and effectiveness and those that use hosted services performed better fiscally than those that do not.

IT Critical to Revenue Growth

Despite the global recession, more SMEs surveyed in 2010 reported an increase in revenue than in 2008. Those that reported growth view IT as critical to their business success.

• In the past 12 months, 52 percent of SMEs reported an increase in revenue, up from 39 percent in 2008.
• Increasing 20 points since 2008, 55 percent of SMEs view IT as critical to their business.
• Of the SMEs that view IT as critical, 60 percent saw revenues grow over the past 12 months. In contrast, among SMEs that stated IT as not important, less than 29 percent saw revenue increase.

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SMEs Moving Toward Cloud Computing

The 2010 index indicates SMEs are beginning to see the benefits of cloud computing; more than 40 percent of the respondents that use hosted or cloud technology reported revenue rises of 30 percent or more compared with 90 percent of respondents not using hosted technology that saw decreases in revenue. The advantages of hosted or cloud technology are viewed as reduced cost and IT management and maintenance, as well as increased business value, productivity and competitiveness.

• Awareness of hosted services is increasing with 65 percent of SMEs using hosted software to some extent, while 73 percent of the remainder have considered it, compared with only 44 percent in the 2008 Index.
• SMEs are beginning to understand the value of “renting” IT as a service — 36 percent said a pay-as-you-go model would be attractive.

Cloud computing has become a watchword for the IT industry as software and services such as e-mail, websites and e-commerce are increasingly available in an on-premises, off-premises or hybrid model depending on business need.

“Over the last five years, we have seen nearly 40 percent growth in usage of hosted services,” said Michael Korbacher, Director of EMEA Software plus Services in the Communications Sector at Microsoft. “Using pay-as-you-go cloud technologies, small and mid-size businesses can now afford and easily have access to enterprise-class, secure services across any platform.”

Correlating Business Performance With Technology Usage

The findings from the research were concluded by analyst firm Freeform Dynamics, which independently assessed the SME IT and Hosted IT Index 2010 to ascertain to what degree IT adoption is driving revenue growth specifically within the SME community.

The SME IT and Hosted IT Index 2010 commissioned by Microsoft researched 3,193 SMEs in a cross section of private industries in 15 countries. Overall, the findings show greater awareness of the benefits of IT among SMEs and a high reliance on IT across all industries and geographies. The findings indicate a clear path toward better financial performance than for those not currently taking advantage of IT advances such as hosted services.

“Our assessment of the report tells us that an increased focus on IT correlates with good performance in all of the size categories surveyed,” said Dale Vile, research director of Freeform Dynamics. “This whole picture corroborates the notion that technology and hosted services can provide tangible business advantage, even for smaller companies, and it’s not surprising to see that investment in IT and hosting goes hand-in-hand with good financial performance.”