How Do Small Businesses Benefit from Cloud Adoption?
July 2, 2019 | Contributed by: Charles Laughlin
We recently shared an article on the cloud accounting firm Xero’s plans to focus its growth efforts on North America, where it sees more upside than in its home markets of Australia and New Zealand. One nugget (sourced to the Small Business Administration) cited in the article was that small businesses that adopt cloud technology grow their net profits 30% faster than those that do not move into the cloud.
While our newest Modern Commerce Monitor™️ research into small business SaaS or cloud adoption doesn’t directly address profitability, it does enumerate several ways in which SMBs reap tangible benefits from using apps to run every aspect of their businesses.
For starters, SMBs using cloud-based services are redirecting the time they have saved from using the apps into revenue-focused activities. For example, 60% of cloud-based SMBs say they spend 51% to 75% of their time on revenue-generating activities, compared with just 24% for non-cloud SMBs. Non-cloud SMBs were far more likely to spend less than half of their time shaking the money tree.
The survey dug a bit deeper and asked respondents to list specific ways in which they have benefited from cloud adoption. They were asked to pick the top three benefits from a list of option. The results are illuminating.
More than half of respondents said their use of the cloud allowed them to spend more time with customers (certainly revenue generating) and another 45% attributed higher customer satisfaction to the use of cloud technology. This one is huge, given our view that customer experience is the critical differentiator for any business large or small in a world where products and services are largely commoditized.
We also found it quite interesting that nearly half (46%) of respondents said their cloud adoption has saved the business money. Through four waves of measuring small business cloud adoption and the reasons for it, small business owners never put cost savings high on the list. Other factors, including the desire for time savings, always were rated higher. Yet small businesses are seeing cost savings as a clear benefit of the cloud, even if that wasn’t a leading motivator for adoption.
This most recent survey wave was the first in which we addressed the specific benefits of cloud adoption. It’s clear that SMBs are seeing real benefits that can be tied to revenue. This is great news for SaaS marketers.
Yet, as we discuss in our newest LSA White Paper, “The Engagement Challenge”, many small businesses report SaaS software is too complex and they use only a fraction of the available features. Still more SMBs are staying away from the cloud entirely. So despite the progress, the industry has much work to do to deepen SMBs’ connection with their software and to entice more small businesses into using it.
The Modern Commerce Monitor™️ surveyed more than 1,000 U.S. small businesses in April on a variety of questions related to their use of technology to run their businesses. This survey represents the fourth wave of LSA SMB research that was formerly known as the Tech Adoption Index.