SMB trends driving interest in Online File Sharing and Collaboration (OFSC) solutions

June 5th, 2014

SMB Group recently wrapped up its 2014 Small and Medium Business Routes to Market Study, which examined U.S. SMB technology adoption and the buying cycle in 10 key solution areas. (Small businesses are defined as those with 1 to 99 employees, and medium businesses are those with 100 to 999 employees.) As part of this study, we gathered SMBs’ perspectives on their top business challenges, how technology impacts their business, and their technology spending plans.

One of the study’s most dramatic findings is SMBs’ growing realization that cloud-based services, especially SaaS applications, offer powerful and capable solutions while decreasing capital outlays, risks and operational costs. Among the 10 solution areas we assessed, online file sharing and collaboration (OFSC) solutions is one in which SMBs seem particularly interested.

The online file sharing and collaboration (OFSC) market includes a cloud-based infrastructure and software application platform with a range of functionalities that enable SMB employees—regardless of file format, device, application environment, operating system or location—to:

  • Store and synchronize files from multiple endpoints using a cloud service.
  • Upload, manage and distribute content files.
  • Share files from multiple endpoints (e.g., desktops, laptops, smartphones, tablets).
  • Share files among various applications on a given device.

Share files and collaborate with colleagues within the company as well as partners and customers outside the company.

Several trends are driving interest in OFSC solutions, including the following:

  • Email-based file sharing: The use of email for communication and collaboration probably won’t cease anytime soon. SMBs currently use email systems for file sharing and collaboration. Sending multiple copies of files consumes the biggest amount of storage space, accounting for 70% to 80% of storage capacity and storage system costs. However, cloud sharing and collaboration solutions are helping SMBs gain control over file proliferation and replication as well as storage costs while increasing employee collaboration and productivity.
  • Accelerating cloud adoption: SMBs have bought into the cloud promise—a faster, flexible, cost-effective and secure route to obtain the IT solutions they need in order to create and run their businesses. SMB Group research shows SMB use of cloud business and infrastructure applications is poised to grow from 33% to 44% over the coming year.
  • Decreased costs:Cloud-based solutions deliver applications to users over the internet without requiring the purchase of supporting hardware, software or ongoing maintenance. Because cloud vendors manage all of their customers on a single instance of the software, they can amortize infrastructure-related costs over thousands of customers. This results in substantial economies of scale and skill, reducing the total cost of ownership (TCO) for customers that deploy business solutions, and represents a compelling alternative to traditional on-premises solutions.
  • Rising adoption and functionality of mobile devices:SMBs have been adopting mobile solutions at a fast and furious pace. SMB Group research indicates 67% of SMBs now view mobile solutions and services as critical to their businesses. 83% have already deployed mobile apps to help improve employee productivity. However, easy-to-use mobile file-sharing and collaboration solutions failed to keep pace with this explosion until solutions such as Dropbox, Box and Google Drive became available. SMBs will be looking for easy-to-deploy, cost-effective file-sharing and collaboration solutions to get more value from their mobile investments.
  • Explosion of content and data: The volume of data continues to grow at a very rapid rate as SMBs increase their use of data-rich applications and access these applications and content from multiple connected devices. According to a McKinsey & Company report, the amount of global data generated per year is projected to grow 40% versus 5% growth in global IT spending; 30 billion pieces of content are shared on Facebook every month; and 5 billion mobile phones were in use in 2010. This is creating increasing demand for cost-efficient and scalable online storage and content management solutions because SMBs don’t have resources to implement and manage this magnitude of growth with their meager internal IT resources.
  • Increase in information-driven decision making:Data use increasingly will become a key basis of competition and growth for individual SMB companies. SMBs will leverage data-driven strategies to innovate, compete and capture value from information, creating increasing numbers of “knowledge workers” who need to create and access information on a regular basis both from the office and remotely.
  • Limited or no IT resources: SMBs lack the dedicated IT resources of larger enterprises (Figure 2). Most SMBs have limited IT resources, and the resources they do have are fully deployed to keep the IT infrastructure and endpoints up and running. Consequently, they do not have bandwidth to adequately implement and provide ongoing support for on-premises solutions—prompting SMBs to adopt high-quality and high-availability cloud-based solutions.

 

Small and medium businesses (SMBs) are rapidly adopting OFSC solutions to give employees powerful and capable collaboration solutions without the hassles of traditional on-premises collaboration and file sharing alternatives. However, since the functionality of different vendor OFSC offerings varies significantly, SMBs should thoroughly examine their options to see which solutions are best suited to their current and future needs.

The SMB Group recently published a report Online File Sharing and Collaboration: The SMB Market Opportunity. This report examines the key drivers prompting SMBs to adopt cloud-based OFSC solutions; provides market opportunity and revenue forecast from 2014-2020 for these solutions; and detailed information about the top OFSC vendors in the SMB market (AirWatch Secure Content Locker, Box, Citrix ShareFile, Dropbox, Egnyte, Google Drive, Hightail, IBM Connections, Microsoft OneDrive, Salesforce Files). The report concludes with our recommendations for both vendors that offer OFSC solutions, and for SMB customers that are evaluating them.

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