My Take on the Small Business Virtualization Market

My colleague, Edward, wrote a post on Small Business Virtualization, and I wanted to write a followup on my take of the small business market. For me, when I think of small business, I am really thinking of the mom and pop business that you can find everywhere. In fact, according to the United States Census Bureau post on small business sizes, most only have a few employees and would not have a datacenter or server farms. Here is the breakdown of the numbers.

Employment Size of Employer and Nonemployer Firms, 2008 Introductory text includes scope and methodology. These data are also available by industry and state. Table includes both establishments with payroll and nonemployers. For descriptions of column headings and rows (industries), click on the appropriate underlined element in the table.
Employment size of enterprise Firms Establishments Paid employees Annual payroll ($1,000)
n/a – Receipts data are available for employers only for the years for which an economic census is taken (2007, 2002, 1997).
Employer firms 5,930,132 7,601,169 120,903,551 5,130,509,178
Firms with 1 to 4 employees (or with no employees as of Mar 12) 3,617,764 3,624,614 6,086,291 232,062,907
Firms with 5 to 9 employees 1,044,065 1,056,947 6,878,051 222,504,912
Firms with 10 to 19 employees 633,141 667,463 8,497,391 293,534,352
Firms with 20 to 99 employees 526,307 705,430 20,684,691 774,589,335
Firms with 100 to 499 employees 90,386 359,902 17,547,567 706,476,693
Firms with 500 employees or more 18,469 1,186,813 61,209,560 2,901,340,979
Firms with 500 to 749 employees 6,060 72,676 3,681,760 156,491,764
Firms with 750 to 999 employees 3,038 48,005 2,617,087 114,635,897
Firms with 1,000 to 1,499 employees 3,044 64,556 3,720,654 167,658,791
Firms with 1,500 to 1,999 employees 1,533 45,062 2,653,392 121,800,728
Firms with 2,000 to 2,499 employees 904 36,081 2,011,244 94,406,916
Firms with 2,500 to 4,999 employees 1,934 120,416 6,726,611 329,188,349
Firms with 5,000 employees or more 1,956 800,017 39,798,812 1,917,158,534
Firms with 5,000 to 9,999 employees 975 121,835 6,773,466 337,598,036
Firms with 10,000 employees or more 981 678,182 33,025,346 1,579,560,498

Source: Statistics of U.S. Businesses (See industry and state detail) and Nonemployer Statistics

In my opinion, it is this type of small business that cloud computing will help the most, especially in the Software-as-a-Service (SaaS) platform of cloud computing. SaaS has caught the attention of IT at small businesses as it offers everything from email and customer relationship management (CRM) to web conferencing and security applications. Using a web browser or thin client interface, it provides access to applications hosted on a provider’s cloud infrastructure. Cloud is not a single service offering—it’s simply a different way of delivering many of the brands you already know and use today, including: CA, Microsoft, Symantec, Trend Micro, and VMware, among others.

With SaaS, users connect to a business application and all its features and capabilities via a secure web connection. Because the actual application runs at a vendor’s data center, subscribers are not responsible for buying the infrastructure, installing software, maintaining the platform, and putting backup and disaster recovery systems in place. For a predetermined monthly fee, companies enter a subscription agreement for the underlying services they need. SaaS providers generally price applications on a per–user basis.

It is this technology that I believe will let the smaller businesses have some of the same tools that some of their bigger competitors use, thus leveling the technology field of these smaller companies without increasing the cost of physical equipment and people to maintain the technology.

Although I have spent most of my career working with Fortune 500 companies, I have had the opportunity to talk with some of these  small business owners, and the more they learned about the capabilities that they have in the cloud, the more excited they get about the possibilities.

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