A while back, I had the opportunity to chat with Will Gregerson, controller for Schaeffer Manufacturing Company, a producer of synthetic motor oils headquartered in St. Louis. Schaeffer is a customer of NetSuite, a cloud ERP provider, and I was struck by the enormous degree of flexibility the cloud was providing the company’s managers.
Gregerson said that it didn’t matter where he was — traveling, at home, or in the office — all he needed was a tablet computer or laptop and he had access to all his work, and information on the company’s operations. Overall, in recent years, the company grew from $85 to 130 million in sales (a 53 percent increase) with no additional staffing needs in customer service, order entry or accounting.
Achieving growth without assuming some of the risks involved in scaling a business — such as expanding the workforce, acquiring more office space, and adding sales channels — has long been unrealistic and unthinkable. However, many small to medium-size businesses are doing just that, with the help of the built-in automation, economies of scale, and flexibility afforded by cloud. Expect to see a lot more businesses launch or move key operations to the cloud in the coming years, a recent survey finds. Nearly 80 percent of U.S. small businesses intend to be fully adapted to cloud computing by 2020, more than doubling the current 37 percent rate, according to a new survey report from Emergent Research and Intuit Inc.
These aren’t just techie businesses such as app development shops or ecommerce startups. These are mainstream, traditional businesses that produce tangible goods and services, such as Schaeffer Manufacturing that are evolving into cloud-based operations.
The Emergent-Intuit survey also observes that the impact of cloud technology shifts as it is adopted by businesses. It starts out with an initial focus on efficiency gains, then goes on to stimulate entire new business models. The report notes cloud provides advantages to smaller businesses on a number of fronts, such as making it cheaper and easier to start and scale a business, enhancing customer acquisition, service and support, and providing access to technologies once only available to large organizations.
The study’s authors, Steve King, Terry Hicks, and Joshua Reeves, also observe that there are four ways small to medium-size businesses are making use of cloud:
Plug-in players: “Small businesses will increasingly adapt to the cloud by taking advantage of specialized services that can be integrated into back-office operations. Instead of spending time and effort on the nuts-and-bolts of finance, marketing and human resources, cloud-adapted small businesses will plug into cloud-based providers who deliver comprehensive, tailored solutions, giving small business operators the ability to focus on mission-critical areas of business.”
Hives: “Cloud-adapted small businesses will increasingly be made up of individuals who share talent to form a team. These businesses will operate virtually, with employees working in different locations, and staffing levels will be increasingly flexible, rising and falling to meet project needs. For example, independent contractors will use virtual spaces to connect and market themselves. Small manufacturers and producers may share a commercial facility.”
Head-to-headers: “A growing number of cloud-adapted small businesses will compete head-to-head with major firms, using the growing number of platforms and plug-in services to reach markets once only accessible to large corporations. This is already being seen with platforms such as AirBnB, which provide individuals with the ability to reach a mass market through community infrastructure.”
Portfolioists: “Successful cloud-adapted freelancers will bring together multiple income streams to create a career portfolio. These largely will be people who start with a passion, or specific skill, and are motivated primarily by the desire to live and work according to their values, passions, and convictions. They will increasingly build personal empires in the cloud, finding previously unseen opportunities for revenue generation.”
