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Local SMEs see silver lining in clouds

With a worldwide explosion of demand around the corner, clould providers say Hungarian businesses are developing trust in cloud services and at last discovering the advantages they offer.

When Satya Natella took over the CEO’s position at Microsoft roughly one year ago, he announced a “mobile first, cloud first strategy”. He did so with good reason. It was high time for the computer giant to realize that communication increasingly takes place on portable gadgets, and that the need to provide simultaneous access to multiple users is best satisfied by using the cloud. No wonder a survey by market researcher IDC shows that public IT cloud service spending could easily double from today’s volume, reaching $127.5 billion dollars worldwide.

Leading cloud providers in Hungary project similar positive trends, in particular because there is plenty of room for expansion. 

Overcoming skepticism

For now only 2-3% of Hungarian SMEs use such services. “Skeptical executives think their enterprise is not mature enough, and half of such decision makers claim that introducing the services would be difficult,” read a Magyar Telekom statement issued to the Budapest Business Journal. However, according to Telekom’s estimates, growth of up to 50% is expected for 2015. Rival Invitel expects to double overall market revenue. Apparently, an increasing number of corporate leaders in the SME segment recognize the importance of a reliable telecommunications background.

Many smaller firms typically switch from ancient technology to the cyber age in one leap, a phenomenon that resembles the era of the 1990s when families who had never owned a land-line phone went straight for mobile handsets.

In the experience of Telenor, Hungarian companies like to know where their data is stored and prefer keeping an eye on it, as they don’t trust service providers. Such security concerns should be less of a factor if related services become widespread in Hungary.

Demand is particularly high for simplicity: “Our business customers need simple, easy-to-use solutions so that work-related data can be accessed anywhere, and whole teams can work on it at any time,” says Telenor.

The cloud offers an ideal solution for companies with several branch offices or subsidiaries, as employees located at different places can access files at the same time and any changes made are automatically synchronized. This way every person involved in the process always gets to use the latest version.

Public, private, hybrid – take your pick

László Marton, director for ICT business development at Invitel stresses that solutions vary in accordance with company size. “Whilst the advantages of the private cloud are typically used by the largest firms, there is increasing interest on the part of small- and medium-sized enterprises for hybrid or entirely public cloud services. A pillar of our future strategy is based on hybrid solutions, which means in our case that our own data center resources located in Hungary are combined with the cloud capacity of our partners, which is then adjusted to the best value for money for the customer.”

The SME sector misses out on another obvious asset of the cloud, since in Hungary it is mainly software or application-based services that are in demand. Yet companies could easily hire extra capacity for peak periods, like Christmas, when a lot more customers need to be served within a short time. Invitel is atypical in this regard, because its infrastructure and capacity renting are among popular products.

Costs rule the day

Not surprisingly, business customers are most tempted by the promise of cost-effectiveness. According to Marton, the volume of savings is subject to the needs, opportunities and size of the given enterprise to a large extent, not to mention the industry it is active in. On average, savings may amount to some 20-30%.

The cloud should not be perceived as a cure-all tool though. “Every firm has an IT system that can work in the cloud; however, it usually does not apply to the whole IT environment, only some parts of it. We need to find these elements together with the client, then transform them into the cloud and that can be extended to the entire environment as such gradually,” Marton adds.

Why leave software on the shelf?

Flexibility and practical considerations also play a role when picking a cloud service. Hungarian SMEs tend to choose Office 365, which contains the up-to-date version of the Microsoft Office package for a low monthly fee, together with cloud storage capacity, as featured at Telenor.

“Such a subscription costs a couple of thousand forints per user a month and always offers the most up-to-date version, whereas you would have to pay tens of thousands for Office sold in a box, and updates cost extra. An additional incentive is that subscriptions can be adjusted to the number of workers, so an unused software license would never be left on the shelf to gather dust,” Telenor’s experts point out. It remains to be seen how fast domestic SMEs will embrace that approach en masse.