SMBs Are Widely Adopting IaaS, Look to Resellers as Their Preferred Providers New AppDirect Study Finds

By MTS Staff Writer On Nov 25, 2020

Report finds 80% of small- and medium-sized businesses will increase IaaS spending over the next three years; nearly 60% prefer resellers over going direct to providers

As the “as-a-service” cloud model revolutionizes the way businesses of all sizes use technology, a new study released by AppDirect, the leading subscription commerce platform company, reveals that small- and medium-sized businesses (SMBs) are eagerly adopting infrastructure as a service (IaaS) and that they prefer to purchase IaaS solutions from resellers. The report, “A 360-Degree View of the Market for IaaS: Perspectives from Resellers and SMBs,” also found that 72% of SMBs already run most of their workloads in the cloud, and that eight out of 10 plan to increase their IaaS spend over the next three years.

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For years, SMBs have been eager adopters of software as a service (SaaS). Now, as their understanding of—and comfort with—the public cloud has increased, many SMBs are using infrastructure as a service (IaaS) solutions to manage critical parts of their businesses. Small businesses already spend more than $60 billion on IaaS, a figure that is set to reach more than $90 billion by 2023.

“As-a-service solutions have been a game-changer for SMBs, giving them access to enterprise-grade technology that levels the playing field, and IaaS is no different,” said Dan Saks, co-CEO of AppDirect. “Our report shows that SMBs are eager to adopt IaaS, but they want trusted partners to help them scale the solutions that are best for their businesses. There’s a huge IaaS opportunity for IaaS resellers who offer the products and ease of use that SMBs want.”

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The “360-Degree View of the Market for IaaS: Perspectives from Resellers and SMBs” report surveyed a cross section of IaaS resellers and SMB decision makers to uncover what solutions small businesses are buying, adoption challenges they are facing and challenges resellers face in reaching small business buyers. Key findings include:

SMB spending is on the rise. Just 20% of SMBs say they will hold spending at current levels, while 80% plan to increase IaaS purchasing over the next three years. Many are starting to shop around for the best products and deals, with most SMBs buying from multiple IaaS providers to get better pricing (69%). Others also pursue a multi-vendor strategy to diversify their technology (41%) or find the products that best suit their needs.

Resellers are valuable partners. SMBs have two main options to purchase IaaS services – going directly to a provider or working with a reseller. They prefer working with resellers by nearly a 20-point margin—59% vs 41%—primarily for the more personalized attention that resellers offer. In fact, resellers have the edge in almost every area measured, including trust, support, understanding business needs, and flexibility. Providers came out ahead only on pricing and discounting options.

Challenges for resellers in gearing up to serve SMBs. SMBs prefer to purchase IaaS from multiple providers. However, resellers are experiencing significant obstacles to a multi-provider strategy. Lack of skilled staff (82%) is the biggest challenge, followed by provider exclusives (46%). With most SMBs looking to spend more on IaaS, resellers who balance investing in additional personnel and platform technology that can streamline IaaS provider onboarding and management are likely to see a return on their efforts to reach SMBs. Many IaaS resellers seem to recognize this fact. More than half of resellers (56%) plan to increase their investment in selling to SMBs over the next three years.

As SMB cloud use continues to mature and more small businesses turn to IaaS solutions, “360-Degree View of the Market for IaaS: Perspectives from Resellers and SMBs” report can help resellers better position themselves to meet the emerging needs of SMBs, with provider and product portfolios that are well-suited to capture an increasing share of the SMB market.

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