Cloud vector against a tech-inspired circuit background

Why cloud computing is pivotal to SMEs in the digital age

Answer the current business era’s need for fast and easy scalability

30 March 2023

SMEs make up the majority of Asia-Pacific businesses, driving the region’s growth. Adopting the cloud is crucial for future-proofed success.

SME business owners using the cloud

Entrepreneurs used to perceive digitalisation as necessary only for tech-based companies, such as tech start-ups. These innovation-based organisations have been making waves, especially in the Asia-Pacific, where some of the world's most successful start-up ecosystems are formed.

According to this StartupBlink study, APAC countries host 15.9% of the top 1000 global start-up ecosystems, ranking Singapore first in the region and seventh worldwide. Other APAC countries that have made it to the list are China, India, Japan, and Indonesia, among others. With Singapore’s ecosystem alone estimated at US$89 billion, APAC start-ups are showing traditional SMEs that they, too, can participate in the digital economy.

SMEs are essential players in the APAC economy, making up more than 97% of the region's businesses and employing half of its workforce. Though tech start-ups and traditional SMEs have different business models, they are both lean organisations with limited capital. But the latter may benefit from adopting the former's key driver for success: cloud computing.

How the cloud fuels SMEs' growth

SME owner using laptop while on the phone

APAC has the highest population among all global regions and has the biggest percentage of internet users. When the COVID-19 pandemic hit, online activities and transactions increased, boosting global internet traffic by 35% – the most significant growth in a single year since 2013.

This trend has clued organisations in on digitalisation as a valuable tool for business resilience. In the first year of the pandemic, APAC SMEs spent 38% more on cloud services to help them achieve the following:

Control upfront costs for business expansion

Before, only enterprises could afford storage and computing services via the private cloud, which required hiring an IT team and purchasing and customising hardware and software to maintain a proprietary cloud infrastructure. 

Now, SMEs like yours can avoid these costs by using the public cloud, or cloud computing services offered by third-party providers over the public Internet. You can also shell out a bit more for the hybrid setup, which combines the public and private cloud. These options offer flexible spending, letting you quickly scale or cut back on services depending on your needs.

Improve scalability and enable business continuity

In the same way that the cloud can make remote work possible, it also lets you effectively deliver your products and services online. Subscription services, speedy delivery, website building, and personalised customer service are all possible through the cloud. A 2021 survey by Deloitte reveals that besides operational efficiency, APAC business leaders see reaching new customers and boosting profit as the cloud's prime benefits. 

This facilitates business continuity as well. Challenges, such as expansion into new markets and macroeconomic upheavals, are less likely to disrupt businesses operating online and on the cloud. At the height of the pandemic, the Singaporean government supported SMEs by introducing cloud-based applications to promote business continuity and sustain the national economy. The government’s support is paying off, with public cloud spending projected to contribute US$160 billion to the region's economy.

Automate processes

Cloud-based software helps you manage business processes, such as accounting, marketing, communications, and HR management. This frees up your limited workforce for other vital tasks. A survey conducted among SME owners in Thailand proves this benefit, noting how automation increases efficiency – the SMEs’ top reason for adopting the cloud during the pandemic.

Why the cloud is ideal for SME

Woman serving coffee in a cafe

According to the International Data Corporation (IDC), the desire for digital business growth is a key reason for APAC's increased spending on the cloud, which amounted to about US$36.4 billion in 2020. The top cloud spends were on:

  • Infrastructure as a service (IaaS): allows organisations to obtain computing, storage, and networking services on demand.
  • Software as a service (SaaS): lets SMEs access applications over the internet.
  • Server intelligent storage (SIS): uses artificial intelligence (AI) to manage a server's storage capacity by eliminating redundant data and using compression methods.

What makes the cloud attractive to SMEs? IDC attributed this to the cloud's affordability and fast implementation, making online transactions and remote work possible quickly. 

SMEs also face a few unique challenges which cloud solutions are particularly well-suited to address. Cloud solutions can help SMEs: 

Level the market competition

SMEs often compete with larger, more prominent companies with more resources for business expansion. Thanks to the cloud, smaller organisations can now enjoy corporation-level tech services with a pay-as-you-grow scheme. The cloud levels the playing field, scaling up alongside your business so that you can catch up with the major players.

Promote data accessibility

As a Journal of Innovation and Entrepreneurship article explains, Thai SME owners used the cloud during the pandemic to secure real-time data and improve mobility. With cloud computing, you can access important company information from any location at any given time as long as you are connected to the internet. Data inaccessibility disrupts businesses, which is why the Japanese government is offering tax incentives until the first quarter of 2023 to companies that invest in cloud-based systems to boost productivity by creating new products and sales strategies.

Expand and scale in new markets

According to this Sunlife 2022 survey, 43% of SME owners in South and Southeast Asia see decreasing demand as a top business risk during the pandemic. Using inexpensive but effective cloud deployments can help you expand your business and penetrate markets that used to be exclusive to bigger organisations. When your business can operate on an on-demand basis, you gain a competitive edge and new customers.

Nurture workforce and enable collaboration

The aforementioned Sunlife survey reveals that 30% of SME owners are optimistic about growth by hiring new employees. The cloud can help ease recruitment by securing your data, and providing collaboration tools for your hiring team, and avoiding software spending. Even with an existing workforce in place, the cloud still works to boost employee engagement, data access, and productivity.

SMEs’ future growth lies in embracing cloud adoption

The IDC Future Enterprise Resiliency and Spending 2022 survey reveals that by 2023, digital infrastructure will be APAC's business priority, with one in three companies
obtaining over 15% of their revenue from online sales – a 50% increase from the 2020 figure. The APAC market for public cloud services is predicted to reach US$11 billion by 2025, with a compound annual growth rate (CAGR) within five
years of 21.5%.

China and India are some of the major contributors to this market growth. These countries are increasing their secure internet servers to cater to the growing demand for cloud among SMEs in the region.

What was once an exclusive option for enterprises has now become the centre of SMEs' business strategy. The cloud's benefits for smaller organisations include:

  • Business optimisation
  • Harvesting data insights and transforming them into actionable information
  • Enabling remote and hybrid work setups
  • Delivering faster and improved products and services to customers

Still, technological advancement across APAC varies. Some countries grapple with cloud usage barriers, such as connectivity issues, weak digital infrastructure, and lack of knowledge. To combat these, the Asian Development Bank encourages governments to do the following:

  • Strengthen connectivity and promote digital services like payment methods
  • Motivate educational institutions to teach cloud skills
  • Collaborate with cloud service providers
  • Urge government agencies to use the cloud
  • Promote public confidence in digital solutions by supporting cyber security policies

Conclusion: making the cloud work for SMEs

There is no one-size-fits-all cloud solution for SMEs, which is why you need the expertise to navigate the challenging yet results-driven world of digitalisation.

As one of the world's leading providers of digital solutions and services, T-Systems can future-proof your business with tools specific to your industry and your goals. To ensure the quality of its services, we partner with worldwide technology providers to bring you customised platforms with robust security measures and data protection.

T-Systems has provided cloud services for a variety of industries all over the globe, including healthcare, finance, service delivery, and many others. It aims to contribute to Asia's cloud growth as a trusted cloud partner while promoting sustainability and protecting organisations from cyber attacks and data breaches. Speak with us today to become part of our success stories and take the first step towards your digital transformation.

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