Small business cloud computing, China and invisible SaaS

As Alibaba.com subsidiary launches SaaS offering for Chinese SMEs, Alex Bellinger argues more than 50% of UK small businesses will use cloud computing within two years, especially if they don’t realise it.

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31st March 2009 at 7:10 pm

When it comes to software as a service (SaaS) there’s a lot of speculation about small business demand.

But one thing is very clear, there’s no shortage of supply and the SME cloud computing land grab is on. There’s gold in them there hills.

Only today Alibaba.com subsidiary, Alisoft, announced the launch of free internet-based management software known as Shopkeeper.

The service comprises accounting and finance modules at launch and will be offered free to Chinese SMEs – all 42 million of them.

While it has to be said Chinese internet penetration means only a small fraction of that market will have access to Alisoft’s service, there can be no denying Alibaba.com’s ambitions in this area.

According to Reuters, the company plans to spend $146 million on promoting Shopkeeper to Chinese small businesses over the next three years.

Beyond China all the mainstream players clearly see the future of software in the cloud too.

Microsoft has Live and Azure. Google is already there, of course, with Docs, while hosting companies like Amazon and Rackspace also have massive vested interests in seeing utility computing (paying for what you use, when you want it whether it’s software or virtual hardware) succeed.

Meanwhile, the IBM-led open cloud manifesto betrayed a certain cack-handed attempt to regain commercial ground under the guise of openness. [Update: looks like a more harmonious approach may have broken out today after all].

And it’s not just the big guys.  Look at the flowering of SaaS accounting offerings in the UK. 

Kashflow kicked off the trend, but there’s also FreeAgent Central which only last week secured Angel funding, Clearbooks, Bionicbook and Cashboard. Look a little further afield and you could also add WinWeb, Twinfield, Zoho, Quickbooks Online, Freshbooks and imminently Sage Live.

Looking pretty crowded for such a new market, don’t you think?

So I believe supply will create, if not dictate, demand and do so quickly. Cloud computing for small businesses is already a fait accompli.

In just two years over 50% of UK small businesses will be using some form of software as a service, in my opinion.

This despite the fact the self-proclaimed largest UK provider of SaaS accounting software to SMEs, Kashflow, currently has just 3,000 paying customers.

So what’s going to spur such a rapid uptake?

Well, the the benefits of small business cloud computing have been set out well by Davids Tebbutt and Terrar on this blog recently.

But there’s something else – when SaaS becomes invisible, it will become the status quo.

Two years ago now I anticipated google gears before it appeared. Syncing between the cloud and the desktop was always going to be the killer app in terms of SME adoption.

Of course, both Google Gears, Microsoft Live/Azure and Zoho now have seamless sync, albeit a little unpredictable. But once the transition between online and offline, desktop and web are indistinguishable, SaaS to all intents and purposes becomes invisible.

The really big players will roll out adoption by default to small businesses. Several traditional small IT providers I spoke to today who you’d expect to be flogging hardware and software in boxes were already extolling the virtues of cloud computing. The groundwork is being laid.

Synchronisation will also be the key for the plethora of smaller software as a service vendors out there now.

Without rapidly making the online/offline boundaries invisible, they themselves run the risk of disappearing from view.

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Alex is the founder and editor of SmallBizPod, the UK's first podcast dedicated to small business, start-ups and entrepreneurship. Alex writes about topical small business issues, entrepreneurs and anything else that catches his eye here on the small business blog. http://www.smallbizpod.co.uk

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