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Osterman Research comments on “Death by 1000 Cloud Apps”

Last week, Intermedia published “Death by 1000 Cloud Apps: the 2014 Intermedia SMB Cloud Landscape Report.” This report explores why the cloud’s promise of IT simplicity has been replaced by a reality of maintenance, drudgery and overwhelming complexity.

This report is based on research by Osterman Research, which analyses the small business communications and collaboration space. I recently sat down with Michael Osterman to discuss his findings. Here are a few highlights from the conversation.

SMB cloud complexity research report

Q: How would you describe the cloud landscape for SMBs?

A: While SMBs’ understanding of the cloud is improving, they’re still in a state flux. Many are still trying to decide whether to stay on-premise or move to the cloud.

Companies with 100, 200 and 500 seats are particularly at a crossroads. They still have security concerns that keep them from putting everything in the cloud. And they’re trying to determine what the appropriate mix is between cloud and on-prem.

Q: You find an average of 14.3 apps per company. Do you expect that number to increase?

A: Definitely. There are a huge number of applications out there. Just looking at the file sync and sharing space alone. We did a forecast of the market just six months ago.  And when we looked at the players in the space, we were uncovering numerous vendors we had never even heard of before.

Looking at the success of companies like Salesforce, the cloud is still a green field opportunity in a number of key areas.

Over the next couple of years, I would expect to see 18-20 applications becoming the average number for companies.

Q: What are the pains SMBs are feeling when it comes to managing their applications?

A: SMBs are really caught between a rock and a hard place.

If you’re a really large organization, you can distribute the cost of your IT staff over a large number of users, so the cost per user is relatively low. When you get into the SMB space you don’t have that luxury.

If you’re a 100 to 200 person SMB, you have to do much of the same things that an enterprise does—but with fewer users over which to spread the cost of infrastructure and staff.  This results in a dramatically higher cost per user.

SMBs are faced with relatively tight IT budgets, too, but they don’t have as much wiggle room. So they have to look for lower cost ways of doing things. Or they just don’t do them at all.


About Kirsten Barta

Kirsten Barta is Sr Marketing Communications Manager at Intermedia