Jean-Philippe Courtois (Europe) - SMBs Show Sparks of Hope Despite Stormy Season

How are small and midsize businesses (SMBs) in Europe coping with today's economic climate? Jean-Phillipe Courtois from Microsoft International discusses the latest trends and reveals how SMBs are moving to the cloud in this article.

You’d be forgiven for thinking that the global economic crisis was having a detrimental effect on the entrepreneurial spirit, but among small and medium sized business (SMB) owners, we are pleased to report an encouraging sense of optimism.

A new survey of small business sentiment, commissioned by Microsoft and carried out by Vanson Bourne, suggests that despite challenging economic conditions, European SMBs remain positive. There was variance in the data from country to country, of course. Russia and Ukraine showed the most optimism with 40% of respondents reporting they expected to be more successful in the next 18 months, compared to just 8% of respondents in Greece.

Across the 21 countries surveyed, a quarter said they expected to hire new staff in 2012, and among the most bullish countries such as Austria, Sweden and Poland, that proportion rose to a third. Overall, 18% of SMBs expect to invest in new technology and infrastructure next year. Contrary to most economists’ GDP predictions, a large proportion of small businesses intend to grow in 2012.

Technology has a valuable role to play in translating that optimism into top-line and bottom-line growth. More than half of SMB owners said technology will be the deciding factor in whether their business thrives or just survives. Half of respondents said they expected cloud computing in particular to play a more important role in driving growth in their business.

At Microsoft, we believe that technologies like cloud computing can play a critical role in helping bring the European economy back to full health. In my many meetings with customers and partners, it is widely acknowledged that cloud computing is a paradigm shift, equivalent in significance to the transformation that occurred in the nineties when the Internet first went mainstream. This shift will effectively level the playing field, enabling companies of any size to gain affordable, reliable and secure access to best-in-class technology. Thanks to the cloud’s ‘pay-as-you-go’ services that reduce the cost and hassle of IT maintenance, the advantages created by technology are no longer available only to the wealthy few.

Since cloud-powered companies pay only for the computing they use, the cloud is an ideal platform for start-ups, which often don’t have the resources to build their own IT infrastructure until they start to earn revenue. It also removes a potential hurdle for investors, who find it difficult to gauge whether the required IT infrastructure is a worthwhile investment and who want to see companies get to market quickly.

But the cloud isn’t only a boon for those looking to minimize capital expenditure. Operating expenditure is also reduced, by outsourcing IT maintenance so that entrepreneurs can focus on driving their business forward. Return on investment is verifiably measurable; a Forrester study, for example, showed that Office 365 delivers an ROI of 321% with a payback period of two months for the composite mid-size organization.  It’s benefits like these that make cloud a crucial part of the entrepreneurial mix and which explain why many of the 8,000 EU-based start-ups participating in Microsoft’s BizSpark program are already using the cloud.

But while the cloud offers SMBs reduced cost and increased flexibility, a proportion of entrepreneurs surveyed identified security concerns, such as cybercrime and data theft as potential stumbling blocks on the path to cloud adoption. Around a third believed that data wasn’t secure in the cloud, and almost three quarters said they wanted to know where their data was physically located.

Last year, the Centre of Economics and Business Research released a report that said cloud computing will add $1 trillion in productivity to the top economies over the next five years. Another EU-based study, conducted a year earlier, showed that rapidly deploying cloud computing could add as much as 0.3 points of GDP growth. The cloud has the potential to breathe life back into the European economy, and we look forward to the opportunity to help many of the region’s small and medium sized businesses to make the most of that potential.

By Jean-Philippe Courtois, President, Microsoft International