SMBs improve chances of better market access & profitability by three times with high cloud usage: Microsoft & TARI

New Delhi, March 12, 2018 – In a study to measure the social and economic impact of cloud usage among 275 SMBs across 11 Indian cities*, Microsoft and the Thought Arbitrage Research Institute (TARI) found that small and medium sized companies (SMBs) improved their chances of better market access and profitability by three times with high use of cloud technologies. The study captured data showing significant increase in market reach, improvement in employee productivity and operational processes, and an improvement in work-life balance as a direct correlation of increased cloud usage. CEOs in SMBs said, the use of cloud technologies helped their companies with the flexibility of technology usage and by extension in carrying out business operations. They also said that cloud technologies have helped them better control over business and people processes.

The study has, through a regression-based approach, established an empirical relationship predicting probability of impact on socio-economic indicators in relation to change in the level of cloud adoption. Overall, the study suggests that there is a greater than 75% possibility that an SMB adopting cloud will see improvement in different metrics within a period of two years of being on the cloud.

Anant Maheshwari, President, Microsoft India, said, “The CEOs of these companies have seen the positive value and high impact of cloud technologies in transforming their businesses. The findings of this study reiterate the power of digital transformation. At Microsoft we are deeply committed to empower every organisation and every individual to achieve more. We are partnering organizations in their unique transformation journeys, with each one contributing to an ecosystem of innovation led growth.”

Reduction in operating expenses and improvement in cash flow is seen to be a significant benefit of cloud adoption. SMBs can have improved cash flows of up to 308% due to the dexterity and flexibility enabled by cloud usage. 96% of SMBs find a positive impact on their operating expenses within two years of cloud use, which remains stable with time. Security, business continuity and risk management are other areas of importance. 86% of SMBs believe that cloud is a secure platform and that they experienced less risk of loss of confidential information.

According to Selva Ramanujan, Director, MontBleu Technologies, on their experience with cloud technologies, “Online productivity and collaboration tools are a very good solution for SMBs. They allow us to focus on business and not waste funds on acquiring or upgrading IT assets; we can divert the funds to core business activities. Also, upkeep and maintenance of an on-premise solution requires more funds on manpower and other overheads. Security has to be beefed up literally every day to safeguard our information if we use our own datacenters. All of this is not a problem anymore as our mails and files are saved on the Cloud.”

A very key aspect is the personal development that is experienced by the SMB owner. With greater work-life flexibility, SMBs showed a movement towards personal development as well. While there was no conclusive evidence of upwards social mobility, there was a definitive heightened focus on employee development. Around 94% of SMBs had an increase in number of skilled employees, with less investment, within two years of high cloud usage. They were also willing to invest more in their upskilling and overall development, which in turn also led to higher retention.

Commenting on his experience, Dr. Senthilkumar U, Founder & CEO, Bioline Laboratory, said, “Moving to Cloud is the best solution if you require IT infrastructure for running your business. Since adopting Cloud technologies few years back, we have decreased our capital expenditure in accumulating high-end hardware and resources. Data availability is ensured with service level agreements and we have access to the same IT infrastructure and suite of services that large companies have, which allows us to compete better. Bioline is looking forward to a huge growth enabled by the Cloud.”

Impact across Industry Sectors

The study also evaluated benefits across industries in which SMBs operate. The manufacturing SMB sector, although lagging behind currently on high cloud usage, demonstrates the maximum predicted impact within two years of cloud adoption. Retail/Trade, IT/ITeS, Education, Health and Hospitality sectors are early adopters and already reaping benefits.

Ratification with Government Database

The survey also evaluated SMBs utilizing cloud computing with a government database of MSME companies which are not utilizing any cloud computing service, and has found the following:

• Profit improvement/cost reduction metrics: SMBs adopting medium level of cloud services show a 30% improvement, compared to MSMEs on the database which show a 10% improvement.
• Asset utilization metrics: SMBs adopting medium level of cloud services show a 50% improvement, whereas MSMEs on the database show marginal improvement.
• Employee productivity metrics: SMBs adopting medium level of cloud services show a 50% improvement, compared to MSMEs on the database which show a 20% improvement.

Details of the Study

 The study outlines six areas of impact across low, medium and high cloud usage^:

• Productivity and profitability improvement
• Enhanced customer engagement
• Increased competitiveness through better market access
• More secure business
• Increasingly efficient operations
• Personal and societal development

Taking a mathematical average of the impact indicators, there is an overall 3.2X predicted probability of impact across the larger population of SMBs in India for high cloud usage. The observed actual impact on the sample population has been an average of 266%.

*Bangalore, Chennai, Chandigarh, Coimbatore, Hyderabad, Kolkata, Lucknow, Mumbai, Mysore, NCR, Pune through online/ in person survey responses, strengthened through focus group discussion and supplementary telephone and email follow up questions

^Low cloud penetration was defined as using basic email services, file storage and sharing and basic antivirus software. Medium cloud penetration was defined as using productivity and collaboration tools like Microsoft Office 365, web conferencing tools like Skype, financial accounting software, document management tools like Microsoft SharePoint, etc. High cloud penetration was defined as using CRM and ERP software like Microsoft Dynamics 365, payroll, apps development, HRMS, project management tools, e-commerce, etc.

About Thought Arbitrage Research Institute (TARI)

Thought Arbitrage Research Institute (www.tari.co.in) is a not for profit organisation set up under Section 8 of the Indian Companies Act, 2013. It is a privately-funded, independent, non-partisan Indian think-tank and works with government, industry, civil society and other stakeholders. TARI as an institution strives to understand and define Indian conditions better through research as it attempts to bridge the gap in thought development.

TARI’s research is aimed to reduce the country risk and contribute to reducing the cost of capital for India as more business decisions will be based on researched facts rather than opinions. Its mandate is to develop intellectual capital for the country in the areas of Corporate Governance, Sustainability, Economics and Public Policy.

About Microsoft India

Founded in 1975, Microsoft (Nasdaq “MSFT” @microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more. Microsoft set up its India operations in 1990. Today, Microsoft entities in India have over 8,000 employees, engaged in sales and marketing, research and development and customer services and support, across 11 Indian cities – Ahmedabad, Bangalore, Chennai, New Delhi, Gurugram, Noida, Hyderabad, Kochi, Kolkata, Mumbai and Pune. Microsoft offers its global cloud services from local datacenters to accelerate digital transformation across Indian start-ups, businesses, and government agencies. In 2016, Microsoft opened one of its eight Cyber Security Engagement Centers in the country, to address security needs of both public and private sectors.

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