Cloud Computing Boosts Profits And Fuels Startups

Cloud Computing Boosts Profits

Now firmly out of its initial ascendancy period, cloud computing is rapidly becoming a very real, deployable and efficient means for firms to move to more flexible service-based computing environments.

Put simply, cloud computing has become a mainstream technology tool and its wider benefits are now evident to staff members from the boardroom to the IT department — and at every level in between.

So cloud computing is firmly with us now, but what kind of impact is it really having on the UK in layman’s terms? Are organisations regarding cloud computing as a ‘nice to have’, or are they really reaping real tangible benefits?

In order to get a comprehensive ‘state of play’ view of the UK market, we teamed up with the University of Manchester’s Business School and research company Vanson Bourne to find out how UK businesses are using the cloud and what benefits they’re seeing.

We surveyed 1,300 companies in the UK and the US, across a variety of sectors, businesses small, medium and large, and received some fascinating results from which I think we can draw some telling insights.

The most compelling find was that cloud is enabling a new generation of British startups. This appetite for new and revolutionary business processes has the potential to catapult the UK forward as a centre of innovation and development.

A massive 85 per cent of respondents whose business formed in the last three years say the cloud has made it easier to set up their business. With cloud computing typically being associated with large global enterprises, it’s interesting to hear that small businesses are the ones that are really enjoying the benefits.

According to the findings, 83 per cent of organisations regard cloud computing as a key factor in the recent boom of entrepreneurs and start-ups in the UK, and 35 per cent said that it would have taken longer to afford to set up the business without it.

It’s clear why this is so – the majority of small businesses don’t have the time or resources to focus on their IT infrastructure – they want a cost-effective and flexible solution that allows them to focus on growth and their core business objectives. The lure of the cloud is particularly strong because it enables them to compete with larger companies at a fraction of the IT cost in terms of buying infrastructure or hiring specialist staff.

This finding was supported by Garry Prior, Co-founder of startup Taxi for Two – one of the organisations included in the research – who said: “Without the ability to run our infrastructure on the cloud, we simply couldn’t afford to set up business. Going the traditional managed hosting route would have been a non-starter for us, because you’re looking at several hundred pounds’ commitment from day one. Cloud computing has enabled us to adopt a ‘try and see’ approach that is reflected throughout our business,” he says.

According to Dr. Brian Nicholson, who led the analysis of the findings at Manchester Business School, cloud computing is heralding a boon for UK startups at a time when the country most needs it: “By making high end computing resources available on flexible payment terms at the push of a button we are significantly reducing the level of investment required to set up shop. It has arguably never been easier to start a business and much of that is down to the flexibility of cloud computing.”

Helping to boost profits and growth

Eighty-three per cent of cloud users are pointing to cost savings, with the UK businesses surveyed saving on average £255,000 a year and reducing total IT costs by a significant 18 per cent.

These figures for cloud businesses are in stark contrast to the latest UK data for the economy overall indicating that GDP shrank by 0.3 per cent in the last three months of 2012 with most sectors having declined. Nearly half of UK respondents (48 per cent) agreed that cloud computing has directly helped to boost profits – by a fifth on average. What we also find here is that 40 per cent stated that cloud computing has been a key factor in enabling their company to grow its business.

So what matters now is that rather than fighting for survival, the majority (62 per cent) of cloud enabled businesses are reinvesting their cost savings back into the business with a focus on product innovation and development (stated by 48 per cent). However, nearly half (47 per cent) of respondents also reinvested money into increasing headcount or boosting wages and bonuses. The survey points to a potential boon for jobs with over a fifth (22 per cent) employing more people with the cash saved from cloud.

What’s great to see is that cloud computing is no longer just hype – these findings show that it’s delivering real cost savings and enabling businesses to grow against a fragile economic climate. Taxi for Two, Kashflow and Augify are just a few examples of startups that have leveraged the cloud for unprecedented growth and are able to focus on innovating to create amazing services for their customers.

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Nigel Beighton

Nigel Beighton is responsible for driving the OpenStack Cloud community internationally and for delivering world-class offerings for Rackspace in the international markets it serves. He is Rackspace’s voice in the market place across EMEA and Asia Pacific, and the central focus for the International technical team to increase the level of expertise and engagement. Nigel has considerable experience with strong technology, leadership and commercial capability. He has most recently worked as Group CTO for Associated Northcliffe Digital covering the group’s digital businesses, including FindaProperty, Prime Location, and Teletext. Over the past 10 years Nigel has been CTO for lastminute.com, Operandi-Group and CityReach International. He was also the Director of Enterprise Strategy for Symantec.