Press Release

Cloud vs. On-Premise: UK SMEs at a Crossroads

Wed 6 Sep 2023

A new report by internet service provider Beaming has revealed that the use of cloud computing among UK small and medium-sized businesses (SMEs) is now as common as on-premise infrastructure. However, more than a quarter of SMEs adopting cloud say they have yet to see any benefits from the move.

The ‘Making the cloud work for UK businesses’ report surveyed 500 SME leaders. It showed that small businesses now use the cloud more than on-premise servers. A total of 39% of companies with between 10 and 49 employees use the cloud for most IT applications and data today, compared to 36% for on-premise equipment.

On-premise servers are still the marginally most common option for medium-sized businesses. Firms with between 50 and 249 employees still trust the majority of their IT applications and data to on-premise infrastructure (41%), but 38% now prefer the cloud.

Beaming’s study showed three main motivating factors drove SME’s cloud adoption, including the support for remote work (29%), freeing themselves from managing on-premise IT assets (28%), and reducing IT costs (27%).

Unlocking the benefits of cloud

Looking across a range of factors, around three-quarters (72%) of SMEs using cloud as their primary platform in at least one business function said the move had delivered benefits.

Half of migrated SMEs cited enhanced data security, alongside greater collaboration (48%) and productivity (46%).

However, more than a quarter (28%) of leaders reported that they experienced no benefits from moving to the cloud and a quarter (25%) said the move was more negative than positive.

Just over a quarter of SMEs (27%) said their use of cloud had created more security concerns and 24% reported that they were less able to manage workers’ use of online services.

The rising cost of cloud services was also a significant concern, with a quarter of SME leaders (26%) complaining that this was harmful to their businesses. Respondents anticipated a 10% rise in cloud-computing costs this year, on average.

“There is no doubt that the cloud offers huge benefits when its functionality aligns with a firm’s needs. But it is also clear that moving to the cloud is not the golden bullet some might think, and costs can soon mount up, leading some companies to review their use of the cloud.

“Some firms are paying for bells and whistles in SaaS products they do not need. And they are adding complexity to systems that could be simpler,” said Sonia Blizzard, Managing Director at Beaming.

In response to rising costs, 47% of small businesses planned to reduce their use of cloud-based services in 2023, and 36% said they would reduce the amount of data held in the cloud. Medium-sized companies planned to store less data in the cloud (31%), and 33% wanted to downgrade their web-based services.

“The issue is not about cloud services themselves, which can offer uniquely powerful services and great value.

“Instead, it is about SMEs needing to do a post-pandemic ‘spring clean’ of their IT to realign the services they are paying for with their real needs so they can take advantage of the opportunity that cloud services and associated AI can bring,” concluded Blizzard.

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