Intuit says 37 percent SMBs are fully adapted to cloud – right or wrong?


Sponsored research from Intuit says that 37 percent of SMBS are fully adapted to the cloud. There are plenty of reasons to suggest otherwise.

[sws_grey_box box_size=”690″]SUMMARY: An Intuit sponsored study conducted by Emergent Research says that today, 37 percent of SMBs are ‘fully adapted’ to the cloud, a figure set to rise to 74 percent by 2020. If the data is correct then this is not a shabby result. That runs contrary to what Ron Miller reckons. But then Miller is way off base. But then the research might be questionable as well. [/sws_grey_box]

intuit cloud research
via EmergentResearch/Intuit

We don’t know the methodological basis for the Intuit research but we do know that Emergent is pitching cloud heavily for Intuit and we also know this only covers US businesses. That’s clear from a recent write up by Accounting Technology where the main ‘pitch’ covers a series of business type personas with which cloud native businesses will be familiar. To quote:

  • Plug-in Players, which plug into cloud-based providers that deliver comprehensive, tailored solutions and take advantage of those ecosystems and networks to collaborate and share information.
  • Hives, or the “Hollywood model” that futurists have been predicting to be the next big trend for the last 30 years, according to King [report author.] In this model, staffing levels are flexible, rising and falling to meet project needs and including pooled resources and shared workspaces.
  • Head-to-Headers, or small businesses competing against major firms by using platforms and plug-in services to reach markets previously only accessible to large corporations. This persona has become more prevalent in the pharmaceutical industry, where King has witnessed “a surge in growth in small pharmaceutical companies that can use high-end software and big data on the cloud, and not need to have big labs and staff.”
  • Portfoliosts, or cloud-adapted freelancers with multiple streams of income, some passion-based and some needs-based, who are building personal empires in the cloud.

I don’t have a problem with this but it is thoroughly wrong headed to assume that all businesses do or will behave this way. There are many, many small and medium sized business types that do not need to operate in these ways. If anything, the report authors seem to be predicting a services only world. If that’s the case then how does anything material get done? How did my local builder get materials to site for example? He called up, ordered over the phone and collected what was needed.

Regardless of the megaphone pimping going on among analyst aficionados, there are plenty of SMBs that will be making ‘stuff’ well into the future. Tried and trusted methods of getting from raw materials to finished product may be augmented by cloud services but they won’t be the be all or end all.

Miller thinks that those who don’t get on the cloud train are doomed. Speaking to the numbers, he says:

And let’s not forget that will still leave almost a quarter of small businesses not fully embracing the cloud. During that time, these small businesses using on-premises software will very likely be at a competitive disadvantage.

And right there you have it. The assumption that all SMBs use on-premises software. That’s not true. My analysis stretching back over five plus years suggests that the biggest barrier for vendors wanting to capture the new entrant SMB market isn’t the on-premises provider. It is the spreadsheet. Once that barrier is overcome then they’re all in with the cloud. For those businesses that have already established on-premises systems, if there is any barrier it is a lack of functionality in those systems that run their businesses.

You only have to look at Albert Pang’s analysis of cloud revenue among the top 500 vendors for 2013 to see that at number 19, Intuit only counts $224 million in cloud based revenue out of total reported revenues (PDF) of $4.17 billion. That’s 5.3 percent. And Intuit owns the US SMB accounting market. In other geographies we often hold up Xero as an example of a newish competitor doing very well but even they were only counting 284,000 paying customers globally in their March 2014 report.

Taking these factors together, it is therefore difficult to square the research circle while at the same time applauding Miller for any real insight. He says:

If I were a small business with employees, I would see the cloud as the easiest way to go even though I would move to paid versions of these tools. I can sign up new employees easily and it’s no problem adding or removing accounts, scaling up or down as my needs require. Contrast that with the cost of servers and software and maintenance and all that involves. Instead, you have a cloud provider that deals with all of that

Of course he would – Miller’s a tech guy. But like us, he’s in a less than one percent minority of people who live and breathe this stuff. In the real world, the Xeros of this world have to argue their case up and down the country with accountants every day. Why? Accountants remain significant technology investment influencers and they’re only just waking up to cloud benefits in any significant numbers.

I’d argue that the reality is very different from Emergent’s findings and that while there may be an acceleration in the cloud based solution adoption rate among those businesses that conform to Emergent’s four business personas, we are a long way off being able to definitively say that large swathes of SMBs are ‘all in’ or ‘fully adapted’ to the cloud.

Instead, what we should be doing is surfacing use cases where business models are changing, demonstrate the benefits of whatever technology is on offer and go from there.

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