Small business shies away from cloud

Most UK entrepreneurs still run shy of cloud computing, citing fears over security, performance and contract terms, says a new study.

The study by cloud service provider Zunicore questioned 400 small business entrepreneurs. 72 per cent of those asked said that inadequate technology was reducing their business profitability, while only eight per cent said they had taken extensive advantage of cloud services.

Asked what their biggest IT challenge was, 40 per cent cited security of data and 33 per cent said it was capital costs. Only nine per cent said that the right technology was helping them to win business.

The study found that 22 per cent of respondents said their understanding of cloud computing was "very good" while another 31 per cent said it was "good". In addition, 69 per cent of respondents said they currently employed cloud services within their business, and almost a third were testing a limited number of cloud services.

The most popular cloud services were online storage, using services such as Dropbox or Windows Live, and web-based productivity applications such as Google Apps, Salesforce.com and Microsoft 360. 26 per cent of participants said they used the cloud to back up their business data.

However, a third of small business leaders said they do not use cloud services, and are not looking to use cloud in their businesses. They gave a number of reasons for this, with data security being their number one issue, followed by bandwidth speed and performance worries, a lack of clear benefits, and concerns over contractual agreements.

Study participants also highlighted the difficulty entrepreneurs face in assessing IT risks. “It’s quite a strange concept to consider the physical security of your office space and the quality of your internal IT structure, which probably isn’t going to be that sophisticated if you’re a small company,” said Mark McDermott, managing partner of digital strategist Codegent. “To map that against the concept of being internationally hacked is quite weird. What’s more likely to happen?”

“Access to hacking hardware is much easier these days and there’s more data online, so hackers can find things they could never access before,” added James Devonport Wood, CEO of Facebook marketing service PageHub.

Greg Rusu, general manager at Zunicore, said it was totally understandable that businesses were wary of trusting third parties with sensitive data such as financial and payroll information, and customer credit card details. “In reality, much of this is better stored in their own secure data centre, rather than in the cloud,” he said.

He added though that a private secure data centre might not be an option for small companies. "Cloud computing can give you enterprise-grade computing capabilities which most SMBs cannot afford," he said. "The challenge for the cloud services industry is to demonstrate that it can offer secure services to customers, whether these services are banking, ecommerce or VoIP."

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