Business

There was a great post on the bMighty blog last week regarding the debate between who Infrastructure as a Service (IaaS) is better targeted for – large enterprises (+1,000 employees) or small to midsize businesses (SMBs). 

According to a recent Forrester research report on cloud computing models entitled Conventional Wisdom is Wrong About IaaS, a higher percentage of enterprise-level businesses are interested in Infrastructure as a Service than SMBs.  Fredric Paul, the blog author, argues that despite this report cloud computing is more appropriate at the SMB level.  The reasons include: less legacy infrastructure, fewer security and compliance issues, greater capital expenditure constraints, smaller internal IT staffs, and a bigger appetite for innovation.

He concludes by stating: “Given the exponentially larger number of small and midsize businesses, even if they're a few percentage points less likely than enterprises to head to the cloud, there will still be waaayyyy more SMBs in the cloud than there will be enterprises.”

Over the last year I have seen the debate between the value of cloud computing, and SaaS, for enterprise vs. SMBs grow.  This is quite important to any cloud computing or SaaS business which is trying to refine its target market.  Many IaaS and SaaS businesses focus solely on SMBs, as described in Chris Anderson’s book The Long Tail.  Part of the reason is that this previously under-addressed market segment is huge – and there is much opportunity for quick sign on and customer benefit.  But, larger contract scale and margins from enterprise customers make that segment too enticing to ignore – especially in light of the growing trend of buy-in from these types of businesses.




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Alerding Castor is an Indianapolis law firm focusing on business law, information technology law (including SaaS law and legal technology consulting), private equity consulting, probate and business litigation.