Cloud Computing Baffles Midmarket

Top 10 Cloud Stories Of 2010

In spite of widespread forecasts for continued growth of the cloud, nearly two-thirds of respondents in a recent survey of midsize businesses said they didn't understand what the term meant.

The survey, commissioned by cloud service provider Virtacore Systems, polled 210 representatives of companies with between 100 and 1,000 employees. Roughly one-third of the respondents identified themselves as members of IT departments, while the other two-thirds indicated they were on the "business" side -- in functions such as sales, finance, or management. But therein lay one of the more interesting discoveries: Nearly half (48%) of those in IT operations said they did not have a clear understanding of the cloud.

"We knew there was a need," said Kevin Burke, Virtacore's vice president of sales and marketing. "This survey was beyond even what we thought." Virtacore focuses on midsize companies as its target market.

One of the survey's questions asked: "Do you feel that the cloud has potential for your business?" 49% answered: "I don't know." 48% likewise responded "I don't know" when asked if their company used any cloud-based applications or services.

Top 10 Cloud Stories Of 2010

Burke said that the results highlight issues of definition and understanding in the field, noting that marketplace education will be an ongoing test for cloud vendors.

In fact, the survey showed that plenty of workers have already adopted some form of cloud computing without realizing it. Of the respondents who said that their organization used Web-based software for email, CRM, productivity, conferencing, and other uses, 54% did not identify them as cloud applications. The survey cited examples such as Gmail, Google Docs, Salesforce.com, MobileMe, and WebEx in its question.

Another eye-opener for Virtacore's Burke was that the cloud's cost-savings message -- a common one in marketing to the small and midsize business (SMB) segment -- might not be getting through. Of the companies that said they used no cloud-based applications or services, 47% cited lack of budget as the reason why. Concerns about cloud security, on the other hand, did not crack the top five reasons for steering clear of the cloud.

"We felt pretty strongly everyone knew about that," Burke said, referring to potential cost efficiencies for businesses in the cloud. "I was kind of surprised that didn't shine through a little more."

Though the meaning of the buzzword is far less important than cloud computing's actual business applications, the problem of definition is a real one for vendors like Virtacore. A common challenge the company faces in the market, Burke said, is that potential customers often first think of Software as a Service (SaaS) and applications such as email or CRM when they hear the term "cloud," while Virtacore focuses on servers and infrastructure.