What Hybrid IT means for SMEs

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Constant technical innovation is the key to growth and prosperity for all businesses, from the largest multinational to the smallest SME – whether they are a startup, a scale up or approaching relative maturity.

The scale of spending on digital transformation is staggering. Analyst group IDC predicts ‘direct digital transformation (DX) investment spending of $5.5 trillion over the years 2018 to 2021.’

IDC predicts that by 2020 - ’30 percent of G2000 (the world’s largest) companies will have allocated capital budget equal to at least 10 percent of revenue to fuel their digital strategies.’

Shawn Fitzgerald, IDC’s research director, Worldwide Digital Transformation Strategies says ‘This shift toward capital funding is an important one as business executives come to recognize digital transformation as a long-term investment,’ and he predicts a commitment to funding digital transformation that will ‘drive spending well into the next decade.’

Investing 10 percent or more of your turnover on modernising your technology infrastructure and enabling new digitally driven innovation might seem an unattainable challenge for many SME organisations, but if the world’s biggest companies deem such investment necessary, then small businesses should at least prioritise technology investment.

Of course, multinationals and SMEs face different challenges. Multinationals are likely to carry a heavy technology debt from past investment in legacy applications and infrastructure. SMEs on the other hand are likely to suffer from both some technology debt and a history of underinvestment in technology.

However, just as digital technology has enabled startups to create whole new industries and SMEs to enter global marketplaces, it also requires SMEs to invest as heavily and probably, in a more focussed manner than their multinational rivals, with their larger pools of capital and human resources.

Is cloud the only answer?

For more than a decade, tech vendors, analysts and the press have focussed on the revolutionary potential of cloud computing.

Cloud certainly has enormous advantages - allowing organisations of all sizes to access new products, services and innovation, but it has sometimes failed to live up to expectations, adding rather than reducing complexity and exposing organisations to hidden costs.

The high-tech startup with its founders operating on laptops from coffee shops or co-working spaces, using a host of cloud-based productivity and collaboration tools, is a modern business cliché. But business reality is often very different for SMEs – whether startups or established operations – and for large enterprises.

That is why, despite the hype, spending on cloud – Software as a Service (SaaS), Infrastructure as a Service (SaaS) and Platform as a Service (PaaS) – still does not account for the majority of global IT spending. Analyst group Gartner is predicting that by 2022, ‘traditional offerings will still constitute 72 percent of the addressable revenue for enterprise IT markets,’ with cloud providers taking 28 percent. Other analyst groups come up with slightly different estimates, but the message is plain – cloud is the future but there is a long way to go.