SMBs prefer to buy IaaS from partners.
SMB cloud adoption of SaaS is strong. Now this market segment increasingly is turning its sights to infrastructure as a service (IaaS), with expected IaaS spend expected to reach $90 billion by 2023. That’s according to new research from AppDirect.
The AppDirect report – “A 360-Degree View of the Market for IaaS: Perspectives from Resellers and SMBs – found that 72% of SMBs run most workloads in the cloud. Over the next three years, eight out of 10 SMBs plan to increase IaaS spend. Today, IaaS spend for these businesses is approximately $60 billion.
AppDirect’s Dan Saks
“As-a-service solutions have been a game-changer for SMBs, giving them access to enterprise-grade technology that levels the playing field, and IaaS is no different,” said Dan Saks, co-CEO of AppDirect. “Our report shows that SMBs are eager to adopt IaaS, but they want trusted partners to help them scale the solutions that are best for their businesses. There’s a huge IaaS opportunity for IaaS resellers who offer the products and ease of use that SMBs want.”
“Resellers” in the AppDirect report encompass VARs, MSPs and telecom companies. The research is based on a survey of 150 qualified IaaS resellers, 325 SMB IaaS decision makers, and five in-depth interviews with IaaS resellers and SMB IaaS decision makers. Cascade Insights did the research on behalf of AppDirect from June-August.
Partners Preferable for SMB Cloud Adoption
Given the two options that SMBs have for buying IaaS services – reseller or direct – 59% prefer resellers. The other 41% buy directly through cloud service providers. The lion’s share of survey respondents (95%) prefer buying though a reseller because they can buy from multiple providers.
There are three other key reasons why SMBs prefer resellers. Sixty-six percent of respondents agree that resellers understand their business needs. Sixty-three percent appreciate the support they get from resellers, and 60% agree that resellers act as trusted consultants to their business.
While the report authors agree that resellers have the edge over cloud service providers in most areas, they falter when it comes to pricing and discount options. Sixty-seven percent of respondents agree that when it comes to price, providers do better.
Among partner types, survey respondents prefer MSPs (81%), followed by VARs (53%) and telecom companies (37%).
What’s on the IaaS Menu?
So what IaaS solutions do partners offer? Storage (100%), databases (100%), both desktop virtualization and machine learning (89%), network (77%), compute (73%) and mobile services (34%).
Additionally, the report notes which IaaS cloud providers partners resell. They are Microsoft Azure (65%), Google Cloud (52%), AWS (48%), IBM (17%), Oracle (10%) and Alibaba Cloud (1%).
Despite SMBs’ preference to buy IaaS from resellers, there are some challenges for partners, according to the report.
Resellers are experiencing significant obstacles to a multiprovider strategy. The biggest challenge is that 82% report a lack of skilled staff. More specifically, respondents cite the cost of developing additional skills or hiring support to include additional suppliers. At the same time, 56% of resellers plan to invest more in IaaS efforts over the never three years.
There’s another important challenge reported by resellers. Nearly one-half (46% say that exclusive deals with the provider they currently work with hold them back from working with additional IaaS providers.
