Debating the future of small business IT

It’s not all about the cloud. As Microsoft launches Azure, a software plus service model could well spell the future of small business IT.

3rd November 2008 at 9:21 am

Microsoft has to steer a very careful course into the future. From its own point of view, it needs to continue to deliver value to customers while remaining profitable. From the customers’ point of view it needs to keep existing systems going and grow into new ones without unnecessary disruption.

As you know, Microsoft has enormous power given its installed base and the ecosystem of developers and resellers that surrounds it. It just needs to transition them into a new kind of future from which they can all benefit.

It has ideas, of course. Most notably, at the moment, the idea of software plus services (generally referred to as S+S). This is predicated on the fact that real people in real life actually like the richness of Microsoft applications and they need to be able to work while disconnected from the internet but take advantage of web-based services when they’re online.

Naturally enough, the company was curious to know what customer reactions to this are likely to be, so it commissioned some research from technology market research specialists, Vanson Bourne. This was global in nature and focused on 1300 companies of up to fifty employees.

Assuming that the opening paragraph of Microsoft’s press release contains the most interesting information, I shall reproduce the core of it here:

The research highlighted that many small businesses struggle to compete with big businesses and are unsure of how to get access to higher-quality IT services that could help them. Government support is often widely used and well-received, but in some cases, it is thought to be too limited. Small businesses face numerous challenges with IT but are also seeing the benefits that mobile working and social networking can bring.

As a follow up to the report, a dozen or so interested journalists debated its content with representatives from Microsoft, the Institute of Directors, Rackspace – a hosting company and one of its clients. Freeform Dynamics’ Dale Vile was asked to chair what turned out to be a very interesting session.

The main benefits identified were that high fixed IT costs could be converted to variable ones; the pain of IT (archiving, data retention, security) could be exported elsewhere; and full and professional participation in the supply chain would be made possible through access to professional applications for a per-user per-month fee.

Great sales lines for Microsoft to consider. But a number of barriers stand in the way, not least the fact that the Microsoft ecosystem as a whole is not yet geared up to provide such services to the smaller customer.

You can, of course, find companies prepared to host aspects of your business. Our own small business uses a mix of local applications, web services and hosted services (Microsoft Exchange and SharePoint, for example). But this mix and match approach only works if you know what you’re doing IT-wise.

What’s needed for this new kind of computing to go mainstream is:

a) acceptance that hosted services make sense
b) some trustworthy providers
c) a range of appropriate applications
d) a ‘one stop shop’ for your computing needs

We’re already well advanced with a). Web-based email is the classic. With b), we are going to see many big-name providers emerge from the woodwork, including Microsoft itself. It will bring in its wake some of c) and its developers will also join the party in due course. It really is early days for these people. They were introduced to ‘Azure’, a development platform for applications to run over the internet, just a few days ago.

The last item, d), depends on your own reseller coming on board. (Or you finding a new one.) On the one hand, they will need to be rewarded for shifting from box sales to service sales. On the other, they will need to be good enough to understand your business and its IT needs and present you with a sensible mix of solutions, without disrupting your business. If they don’t talk your language already, you might ask yourself why you persist with them.

Don’t let anyone try to persuade you that we’re in the middle of a revolution. We’re not. It’s an evolution and, judging from the issues raised in our debate, the transition will happen over several years. But that doesn’t mean you should ignore it. Other hosted applications like will emerge and provide you with genuine leverage. Keep your eyes peeled for such opportunities, but try not to get caught up in the hype.


David Tebbutt is an award-winning columnist and feature writer who specialises on the subject of using software and technology to increase business productivity. He's an analyst with Freeform Dynamics but, in previous lives, wrote for Director magazine, Real Business and was also editor of Personal Computer World.

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  1. Martyn says:

    Nice article.

    We are a company in the target range, circa 50 employees, and we struggle with the on/off line or cloud/local balance – especially as we are becoming more “mobile”.

    There are solutions, but, as you say, you need to know what you are doing to glue them together.

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