Defining cloud planning for the SMB

InsightaaS: The Toronto Cloud Business Coalition is a group of professionals from all sectors of the cloud economy – suppliers, intermediaries, IT management, finance professionals, academics and other experts – that is working to accelerate cloud adoption and growth in the GTA and across Canada. TCBC has multidisciplinary groups working on development of best/proven practices perspectives in 10 key areas.Each group is working with an InsightaaS principal (Mary Allen or Michael O’Neil) to develop documents that can be used by Canadian firms to launch, expand or enhance their own cloud activities.

The piece below is the output from a meeting of the Planning for the Cloud/Cloud Strategy-SMB working group. It represents the first section of that group’s best practice deliverable – the definition of why and how the topic is important in a Canadian business context. Although it is only a fragment of what will be a longer document, we thought that it would be of value to readers, both as a means of understanding key issues in cloud planning and also as a glimpse into the terrific work that is being done by TCBC’s members. InsightaaS would especially like to thank all TCBC members, particularly Ashroff Khan of Forrec Ltd., Brandon Kolybaba of Cloud A, Alex Sirota of NewPath Consulting and Jeff Lamboy of GoDaddy for their contributions to this analysis.

SMB planning for the cloud: scope and definition

The TCBC Planning for the cloud/cloud strategy – SMB working group is focused on a complex set of issues: what is it that SMBs need to consider, as they adopt hosted and cloud solutions to address different needs within their businesses?

Definition in this context, as is illustrated by Figure 2, spans several related considerations. The first concerns the target population: what is an “SMB” from a cloud adoption process? The TCBC working group believes that SMB perspectives and requirements are shaped by two issues, business size and technical vs. non-technical buyers.

As a starting point, SMBs can be divided into three categories by e-size: microbusinesses of 1-19 employees, small businesses of 20-99 employees, and mid-sized businesses of 100-499 employees.

The second issue is to define the types of cloud buyers in each category, to identify who should be involved in the cloud planning/strategy process. Our belief is that in all three categories, the key non-technical buyer is senior business manager. This group is looking to embrace cloud-based systems to add new functionality to business processes, and/or to simplify and reduce the cost of IT. Hosted solutions offer a compelling value proposition to this group, but over time, integration gaps between disparate systems can eat into the benefit that each individual solution provides.

We do not believe that there are technical buyers in microbusinesses, except for those that are in the business of IT – tech start-ups, often looking to develop SaaS applications. In small and (especially) medium businesses, there will be a technical buyer; for cloud, this is generally the development lead. These buyers are looking for cost efficient, scalable development platforms. They are often challenged by the absence of effective business processes within SMBs – they deploy new applications but have issues with managing the spread of those applications, and as a result, the accompanying requirements for integration and support.

Figure 1. SMB cloud buyer segments

Organization Size Technical Buyer Non-Technical Buyer
1-19 Only tech start-ups Senior business management
20-99 Development lead Senior business management
100-499 Development lead Senior business management


Definitional framework

Once the core SMB constituency is identified, it’s possible to develop a framework to define the key dimensions that apply to SMB cloud planning and strategy.

The working group started by identifying the differences between three IT delivery options available to SMBs. The first, traditional infrastructure, is built on-site from hardware and software components. It is often managed internally (in some cases, with assistance from a third-party supplier who performs on-site maintenance), and provides local access and support for users. This type of infrastructure is in place in many small businesses and virtually all mid-sized businesses today. It has the advantage of providing (in some cases, more by osmosis than design) a consolidated source for infrastructure and applications. However, this is not an agile approach to IT. New workloads require capital investments, and therefore, generally demand extensive planning tied to a 3-5 year use case. They also require internal or contracted IT resources for set-up, deployment and support.

Buyers working with providers for hosted solutions (such as web sites) or applications have a different set of options, opportunities and constraints. It is generally much easier to add a service than to buy, integrate and deploy a component-based system. Hosted solutions are most often purchased on a “pay as you go” model, with firm commitments generally limited to a year or less, and with no capital outlay. They are provided as services, so there is less (or no) need for internal or contracted IT resources to deliver set-up, deployment and support. They are designed for remote access, and as a result, are often better suited to supporting mobile users than are systems based on traditional infrastructure. And at their core, hosted services represent a ‘partnership’ between the developer and the client: the supplier offers a solution to a defined issue, the buyer looks for this solution to address that issue within his/her business.

There are several potential drawbacks to the hosted solution model. Hosted solutions are as a rule well-aligned with defined problems, but they are not generally very flexible: buyers need to select a solution that meets their needs, or understand that they may need to modify their expectations in accordance with the constraints of the solution. Also, while each solution is managed by the provider, the integration between these systems, and between each system and the internal processes it is used to support, is the responsibility of the buyer. These issues aren’t insurmountable, but they need to be considered when developing a cloud strategy and planning for its implementation.

Cloud infrastructure represents another IT option. Like hosted solutions, cloud infrastructure is delivered on-demand to SMB buyers; also like hosted solutions, cloud infrastructure is an operating rather than capital expense, and support of the offering is provided by the supplier.

However, there are some important differences between hosted solutions and cloud infrastructure. One is the opportunity for customization. While hosted solutions tend to be rigidly defined, cloud infrastructure providers frequently offer the ability to configure offerings to meet specific requirements. This may take the form of opting to use dedicated or shared (virtual private cloud) resources, and will generally also include options for processor, storage and memory capabilities and configurations, and sometimes, for specific software options (operating system, database, etc.). This flexibility allows cloud infrastructure customers to align the offering with their needs, and enables cloud infrastructure providers to align pricing with usage.

The most important difference between cloud infrastructure and hosted solutions is the extent of IT services required from the buyer. While a hosting provider takes responsibility for the infrastructure and the application, the cloud infrastructure provider only manages the core platform – the application is the responsibility of the client. As a result, cloud infrastructure is generally sold to, and used by, technical buyers who are capable of capitalizing on its agility and cost advantages. This group benefits especially from the ability to rapidly launch, scale up/down, and decommission virtual infrastructure. As is noted in Figure 2, this group also has a requirement to manage the sourcing and integration of the different applications developed or hosted on cloud infrastructure, and may well need to understand how to integrate (and secure, etc.) workloads and data sets that extend across traditional and cloud environments.

Situated between the definitions of traditional infrastructure and hosted solutions – and not included in Figure 2 – is colocation, in which a company places its own assets in a third party facility. This approach adds third-party facility management (and in some cases, third party asset support) to the traditional infrastructure approach. Although it is possible to host private cloud on assets housed within a colocation facility, this option is not included within the focus of the SMB cloud strategy working group.

Figure 2 combines the essential elements of SMB cloud planning/strategy.

Figure 2. Planning for the cloud/cloud strategy for SMB: key issues



Key planning/strategy issues

What are the key issues that SMB cloud planning/strategy needs to consider, as firms look across this framework to identify the portfolio of products/services that best meets their business needs? The working group identified five key issues that are intrinsic to development of SMB cloud strategy:

  • Cost: Cost is always an issue in business decisions, and especially so within SMBs. With cloud, though, cost takes on some additional meanings. Cost isn’t only a reduction in CAPEX or in OPEX. Cost can relate to the missed revenue that will result from an inability to address new market demands. Cost could be a function of needing to recover from a catastrophic event (such as data loss) within the business. Cost can be related to a perception that competitors are pulling away, or simply a realization that business as usual is no longer enough – that traditional approaches are no longer effective. Cost, across these many dimensions, is an essential factor in building a cloud strategy.
  • Available resources: For the most part, microbusinesses lack technical resources; in these situations, cloud offers a means of adding IT capacity without also adding internal or contracted headcount. In small and mid-sized businesses, cloud expands the impact of scarce IT resources. However, cloud is not a resource-free endeavour. Cloud requires an ability to connect new solutions to business user requirements, and to each other. Planning for support of cloud systems, especially as they increase in number and scope, is an important aspect of SMB cloud strategy development.
  • Solution requirements: As is noted above, the options that are available to SMBs – especially, the hosted solutions that are the primary option for non-technical buyers – are relatively rigid: they will accommodate a predefined set of requirements and uses, but often can’t be easily modified beyond these predefined parameters. It’s essential for SMBs to understand the requirements associated with a solution, in terms of functionality and integration (both process and technical integration) in the development of a cloud plan.
  • Consistency across systems is not an issue at the outset of cloud, but it becomes on as cloud scales across users and workloads. This is an especially important issue from an infrastructure perspective: have you identified an approach that will create an agile platform for future development and integration?
  • Manageability and migration: the systems that enhance the productivity of non-technical users rely on data – often, on data that is resident in one form or another within the SMB today. SMBs are often (unpleasantly) surprised by the effort and cost involved in migrating data to new systems. SMBs that adopt multiple cloud-based solutions may be further ‘surprised’ by the complexity of managing across multiple environments. A roadmap connecting the needs of the business with its cloud (and traditional) technology options and requirements is essential to minimizing surprise and maximizing manageability.

For more information on TCBC, please contact us at inquiries (at) businesscloud (dot) to. 


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