(Reposted from IT in Canada, March 9, 2012)
Regional SMBs Still Asking Questions about Cloud Migration
Ottawa-based IDS Systems (IDS) has found some regional variation when it comes to migration to cloud. According to President and Chief Technology Architect of IT solutions provider, IDS Systems, small and medium sized businesses in major Canadian business hyper centers such as Toronto, Vancouver, Calgary and Montreal are more open to adopting Office 365 than are those in smaller urban centres such as Ottawa, London or Victoria, who continue to have questions about implementing Microsoft’s Office 365 cloud services.
Created in 1995, IDS provides IT strategy and installation services to businesses and government across Ontario and other parts of Canada, with focus on the development of cloud solutions based on products such as Office 365. Peckham believes SMB hesitation has much to do with questions around value: “SMBs are still very confused as to how they can best leverage a tool like Office 365,” he said, “and it’s very much a question of their business setup. If it is a traditional business in terms of how its network applications are deployed, the company might have some trouble getting the best value out of the Office 365 environment. But many, after serious consideration and if they have users who are highly mobile, see cloud-based solutions as the way to go. Overall, the mindset is still in the formative stage, where customers are thinking, and ‘we really can do something by using the cloud.’”
In Peckham’s view, there are two major motivations behind use of Microsoft’s productivity cloud solutions – the potential for saving money through the online licensing update offered by Office 365 and the potential for providing employee access to a company’s IT system and data in cases where the workforce is highly mobile. “Those that simply want to save money may or may not be good candidates,” he noted, “but those who are looking strategically to use software more efficiently, are better candidates.”
Bringing in cloud solutions requires an infrastructure investment by the SMB. “First and foremost, investment in a robust Internet connection is critical,” Peckham said. “Whereas before it was convenient, without it, staff will be dead in the water. On the other hand, when using cloud applications, the company does not have to worry about having the most up to date technology on all of the staff workstations. This allows continued use of older workstations and longer retention of existing equipment.”
Moving to the cloud, Peckham stressed, involves debate over whether an SMB is better off purchasing licensed software or going virtual and paying for services on a subscription basis. “The big hurdle for a lot of clients is the calculation that ‘if I take Office 365 and I pay for it for three years for that same user, I might as well pay just buy them a license,’” he said. “If your decision is financially based only, I agree, but if you are trying to work more intelligently and are more mobile or security conscious, a cloud-based infrastructure is more applicable to your operation and the hosted application expense can be easily justified.”
Peckham noted that a standard version of Microsoft Office is roughly $350 and that an Office 365 user, at $8 per-month, would accrue costs of about $288 after three years. Office 365, he added, also requires increased use of the Internet and that when additional connectivity expenses are taken into account, the cost of licensing and the cloud are very close. “For a larger organization, the overhead is not so bad,” he said, “but for a smaller organization to transition from a basic DSL connection to a fiber connection is normally a significant expenditure.”
However, Peckham also noted that an on premise licensed setup also requires an IT manager or contracted IT services to maintain the integrity of locally installed software, and to ensure that all updates are applied as they become necessary. “The cloud is definitely a simpler platform to run: it’s ubiquitous and from a disaster recovery perspective, it’s great because now clients have the resources wherever they go,” he said.
Based on his contacts with smaller and larger businesses, Peckham has found that clients in smaller business centres like the National Capital Region are more cautious when it comes to choosing a cloud solution as compared those in large cities such as Toronto and Vancouver – which, presumably are less challenged in terms of networking capability and also more mobile. “The smaller centers are more conservative,” he said. “In the Ottawa market, our customers ask us a lot of questions before they make a decision. Though once they make it, they are all in.”
Some of the questions SMBs ask are, “How would this impact our network?” and “how do we do business and what will happen with our backups and security?” When these queries are answered, Peckham said that the “level of comfort among SMBs becomes better.”
Another issue that is often raised is current investment in installed IT: many SMBs apparently balk at abandoning equipment with the observation, “I already bought this. Why give it up and start paying all over again for the same product?” To this, Peckham replies, “There is a season for migration and it is typically not right after a previous major investment was made. In many cases, the customer needs to be making a transition to virtualization. For example, if a SharePoint investment is about to be made, that could be a catalyst as maintaining the existing application delivery model may not be as effective or could be more costly or complex [than adopting SharePoint Online].”
SMBs facing major IT upgrades in a year or two, said Peckham, are in the best position to migrate to Office 365 and that long-term planning definitely helps to ensure a smooth transition that is cost effective. He cited the firm with 30 people, which currently has a DSL connection as example. “I would tell them that their connection will not be sufficient and that they will need a network change,” he said. “If they are planning on growing or if they will be moving to new offices in the near future, that is the time to plan for a network [and cloud] change.”
Peckham said the mentality of SMBs in Toronto and other large cities in regard to implementing Office 365 differs because of their need to operate efficiently and effectively and to be on the cusp of technology. “It’s the view that ‘I need it now’ and so decisions are made much more quickly,” he said. “There is much less consideration for the downstream ripple effects and the belief that if cloud access causes a problem on the network, it will get fixed. Whereas in Ottawa and other similar areas, the attitude is ‘I want to make sure that all the problems are solved before I make the jump.’”
Overall, Peckham believes that the Office 365 landscape is still in the “early adopter stage,” with many businesses waiting to see how the experiences of the current users turn out. “The market is moving relatively slowly,” he said, “but that’s very common in our industry. With new software models, our national tendency is to watch and wait. But once you hit a certain threshold, the floodgates open and people will be adopting it with far less fear.”
In the meantime, IDS is using this period to hone its skills in Office 365 installations, which are done most often for professional/commercial users such as property managers, labour markets and service providers. It is also developing a methodology to help clients considering a cloud solution plan their migration and it has appointed a senior staff member as director of cloud systems integration. “The key is for customers to better understand their network and other IT issues and for everybody to be on the same page,” Peckham concluded. Like many other Canadian IT services companies, IDS anticipates a significant increase in the use of Office 365 and cloud solutions in general – and to preparing for the coming wave is working to ensure that decision-making is informed and appropriate.