Microsoft Study Reveals Small and Midsize Businesses Using Hosted Services Have Better Financial Performance
Feb. 03, 2010
Research suggests correlation between IT usage and business growth.

REDMOND, Wash. — Feb. 3, 2010 — Microsoft Corp. today released its global SMB IT and Hosted IT Index 2010,1 which investigates how small and midsize businesses (SMBs) across multiple segments fared during the recession and how they use technology. The research finds that businesses that value IT as an enabler for better business productivity and effectiveness and those that use hosted services performed better fiscally than those that do not.

IT Critical to Revenue Growth

Despite the global recession, more SMBs surveyed in 2010 reported an increase in revenue than in 2008. Those that reported growth view IT as critical to their business success.

  • In the past 12 months, 52 percent of SMBs reported an increase in revenue, up from 39 percent in 2008.2

  • Increasing 20 points since 2008, 55 percent of SMBs view IT as critical to their business.

  • Of the SMBs that view IT as critical, 60 percent saw revenues grow over the past 12 months. In contrast, among SMBs that stated IT is not important, less than 29 percent saw revenue increase.3

SMBs Moving Toward Cloud Computing

The 2010 index indicates SMBs are beginning to see the benefits of cloud computing; more than 40 percent of the respondents that use hosted or cloud technology reported revenue rises of 30 percent or more compared with 90 percent of respondents not using hosted technology that saw decreases in revenue. The advantages of hosted or cloud technology are viewed as reduced cost and IT management and maintenance, as well as increased business value, productivity and competitiveness.

Awareness of hosted services is increasing with 65 percent of SMBs using hosted software to some extent, while 73 percent of the remainder have considered it, compared with only 44 percent in the 2008 Index.

SMBs are beginning to understand the value of “renting” IT as a service — 36 percent said a pay-as-you-go model would be attractive.

Cloud computing has become a watchword for the IT industry as software and services such as e-mail, Web sites and e-commerce are increasingly available in an on-premises, off-premises or hybrid model depending on business need.

“Over the last five years, we have seen nearly 40 percent growth in usage of hosted services,” said Michael Korbacher, director of EMEA Software plus Services in the Communications Sector at Microsoft. “Using pay-as-you-go cloud technologies, small and midsize businesses can now afford and easily have access to enterprise-class, secure services across any platform.”

Correlating Business Performance With Technology Usage

The findings from the research were concluded by analyst firm Freeform Dynamics Ltd., which independently assessed the SMB IT and Hosted IT Index 2010 to ascertain to what degree IT adoption is driving revenue growth specifically within the SMB community.

The SMB IT and Hosted IT Index 2010 commissioned by Microsoft researched 3,193 SMBs in a cross section of private industries in 15 countries. Overall, the findings show greater awareness of the benefits of IT among SMBs and a high reliance on IT across all industries and geographies. The findings indicate a clear path toward better financial performance than for those not currently taking advantage of IT advances such as hosted services.

“Our assessment of the report tells us that an increased focus on IT correlates with good performance in all of the size categories surveyed,” said Dale Vile, research director of Freeform Dynamics. “This whole picture corroborates the notion that technology and hosted services can provide tangible business advantage, even for smaller companies, and it’s not surprising to see that investment in IT and hosting goes hand in hand with good financial performance.”

Role of IT Within Business and Revenue Change

It’s critical to our business; we cannot work without it.

  • 14.38 percent - Revenue up more than 30 percent

  • 34.01 percent - Revenue up 10 percent to 30 percent

  • 11:56 percent - Revenue up less than 10 percent

  • 25.49 percent - No change in revenue

  • 14.55 percent - Decrease in revenue

It’s very important for the majority of our activities.

  • 8.86 percent - Revenue up more than 30 percent

  • 28.32 percent - Revenue up 10 percent to 30 percent

  • 8.65 percent - Revenue up less than 10 percent

  • 40.16 percent - No change in revenue

  • 14.01 percent - Decrease in revenue

It’s important but not essential to the running of the business.

  • 8.21 percent - Revenue up more than 30 percent

  • 18.48 percent - Revenue up 10 percent to 30 percent

  • 8.21 percent - Revenue up less than 10 percent

  • 46.33 percent - No change in revenue

  • 18.77 percent - Decrease in revenue

It complements our business but is by no means essential.

  • 7.41 percent - Revenue up more than 30 percent

  • 13.89 percent - Revenue up 10 percent to 30 percent

  • 7.41 percent - Revenue up less than 10 percent

  • 42.59 percent - No change in revenue

  • 28.70 percent - Decrease in revenue

The IT Services Outlined in the Research Are as Follows

E-mail

  • 67 percent SMBs have on site

  • 29 percent SMBs have hosted

  • 4 percent SMBs don’t have

File sharing/collaboration

  • 56 percent SMBs have on site

  • 23 percent SMBs have hosted

  • 21 percent SMBs don’t have

Backup

  • 71 percent SMBs have on site

  • 22 percent SMBs have hosted

  • 7 percent SMBs don’t have

CRM

  • 52 percent SMBs have on site

  • 31 percent SMBs have hosted

  • 17 percent SMBs don’t have

Webconferencing

  • 40 percent SMBs have on site

  • 39 percent SMBs have hosted

  • 21 percent SMBs don’t have

Web site

  • 49 percent SMBs have on site

  • 39 percent SMBs have hosted

  • 12 percent SMBs don’t have

Server

  • 59 percent SMBs have on site

  • 28 percent SMBs have hosted

  • 13 percent SMBs don’t have

E-commerce

  • 46 percent SMBs have on site

  • 33 percent SMBs have hosted

  • 21 percent SMBs don’t have

About the Research

The Microsoft Small Business Technology Index 2010 research report was executed by Vanson Bourne (http://www.vansonbourne.com) between November 2009 and January 2010. The research questioned 3,193 small and midsize businesses (up to 500 employees) across 15 countries worldwide: Australia, China, France, Germany, India, Japan, the Netherlands, Norway, Poland, Singapore, South Africa, South Korea, Spain, the U.K. and the U.S. A copy of the full research report is available through mscsemea@webershandwick.com.

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

1 3,193 SMBs surveyed in France, Germany, Netherlands, Norway, Poland, South Africa, Spain, U.K., U.S., Australia, China, India, Japan, South Korea and Singapore in a cross section of different industries. Microsoft Small Business Technology Index 2010 available on request.

2 Microsoft Small Business Technology Index 2008. Available on request.

3 Table showing correlation between the role of IT within businesses and revenue change

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