Over the last year, 70 to 80 percent of small and medium businesses (SMBs) across 32 countries suffered revenue losses of between 30 and 50 percent when compared to “normal,” according to the Organization for Economic Cooperation and Development (OECD). Many closed their doors and didn’t reopen. By the end of April 2020, almost one-fourth (22 percent) of U.S. small businesses that had existed in February 2020 had disappeared entirely.
But some, surprisingly, grew and even thrived.
How is that possible that the outcome for small businesses varied so greatly? IDC found that the small businesses it dubbed “digital natives” racked up eight times more sales and recovered much faster from the pandemic. In fact, these cloud-native firms were altogether more agile, resilient, and innovative when it came to rapidly pivoting to meet the demands of the COVID-19 world.
That’s the good news. The bad news: only four percent of all small businesses achieved cloud-native status.
Now that’s changing. Many of today’s SMBs are purposefully moving to the cloud. Their plan is to shift 69 percent of their workloads and 67 percent of their data to the cloud within the year.
But simply shifting some workloads and data online isn’t enough to qualify you as a cloud-native business.
You need to take advantage of everything the cloud has to offer. You have to commit.
Only then can you forget about IT infrastructure and focus on your core business. Only then will your business be able to claim the title of cloud-native and become robust and resilient even in the face of global market volatility.
What’s a cloud-native company?
While IT experts will answer this differently, most agree that cloud-native firms have, at minimum, taken the following three steps as part of their digital transformations:
- They shifted to using the hardware and software needed for cloud computing, and away from on-premise systems to run their businesses’ digital activities.
- They took advantage of everything-as-a-service (XaaS) applications and services to digitize the aspects of running their business that aren’t mission-critical and which don’t differentiate them from their competition.
- For business-critical operations, they built—or outsourced the building of—”modern” applications based on containers and microservices that fully leverage underlying cloud capabilities to give them a true competitive edge.
Shift from on-premises to cloud infrastructure
Of course, the world of small business has been moving online for a while. Most companies have their own websites. Many use mobile apps to support their employees and reach customers wherever they are. Then, the effects of COVID-19 actually helped. According to an IDC survey, the pandemic drove more than 70% of small businesses to accelerate their shifts to the cloud.
The majority, however, are just moving isolated workloads and data. For example, most of today’s SMBs have email and telephony applications in the cloud as hosted services. They see that it simply doesn’t make sense to buy and manage their own email server or install telephone equipment. Especially when a cloud service provider can deliver what they need at an attractive (and predictable) price.
A cloud-native company, however, won’t stop there. It will shift all its infrastructure to the cloud.
Why get down in the muck?
On-premises infrastructure is just what it sounds like. You purchase and manage servers, networking hardware, storage volumes, other necessary equipment, and the associated software. Then, you install it in a special company facility or lease space in a third-party data center. You also need employees to manage and maintain it all and troubleshoot when things go wrong. And things will go wrong.
By moving to the cloud, all this falls off your shoulders. All the work—and expense—of purchasing, configuring, connecting, securing, monitoring, and managing this infrastructure becomes the cloud vendor’s responsibility.
Amazon’s Jeff Bezos calls all this IT infrastructure building and maintenance work “the muck” and says businesses shouldn’t touch it. This “undifferentiated heavy lifting” infrastructure work belongs to the cloud vendors. There’s nothing special about it. It’s the same for you as it is for every other company. Bottom line: it costs you money instead of making you money.
So, focus on your business. Leave the muck to the cloud vendors.
Leverage XaaS applications
That’s the argument for moving your infrastructure to the cloud. Now, hear why you should move everything else, too.
The biggest disruption the cloud has brought to traditional IT architectures in recent years is the anything-as-a-service (XaaS) model. XaaS offerings can range from software-as-a-service (SaaS), to disaster-recovery-as-a-service (DRaas), to data-management-as-a-service (DMaaS).
What does that mean? It means that you don’t buy software and you don’t configure hardware. You move everything from traditional back-office operations like HR and accounting to front-end functions like marketing, sales, and even customer service to the cloud. In fact, just try to buy accounting software that’s not in the cloud. Most other business software vendors are rapidly following suit.
XaaS applications are now “table stakes”
According to a recent survey, 74% of small businesses would be unable to operate without using XaaS cloud services.
Note that businesses are most interested in going to XaaS providers for the day-to-day business functions that don’t differentiate them in the market. These services keep your business running efficiently, but they’re not going to give you the competitive edge you need.
That comes next…
Build modernized, cloud-native applications to differentiate your business
This is probably the most essential step to becoming cloud-native. It’s when you transform your most mission-critical applications—the ones you can’t replace with XaaS solutions—by moving them to the cloud. The rewards go straight to your bottom line: you can get faster time-to-market, better performance, lower cost, and higher customer satisfaction.
But this also means leaving behind the old way of doing things and adopting tools and strategies that are, themselves, cloud-native. It requires a new kind of architecture, and even a new kind of development methodology. You start hearing words like containers and microservices.
Breaking things down to microservices
At its most basic, a cloud-native application is made up of reusable components called microservices. Instead of building a single, monolithic application that is hard to modify, you use microservices as building blocks to create a modular application. The microservices within the application—each containing a specific business function—can be scaled or enhanced independently. Because of this flexibility, cloud-native applications are agile. They can be continuously improved based on whatever is happening in the market. Suppose a competitor adds a cool new feature to their online store. In that case, you can leapfrog them by adding or improving your microservices without messing with the entire application.
Containers add to agility
Containers are also a big part of cloud-native applications. Microservices frequently run in containers, which are just what they sound like. Containers hold together all the necessary things that run a microservice or even an entire application: the code, the libraries, and the configuration files. With containers, you can move a piece of software from one operating environment to another, and it will still run reliably. For example, you can push code from an on-premises physical machine to the cloud without any problems. This obviously makes app development much easier.
Conclusion: Get thee to the cloud
Despite unprecedented challenges, many SMBs are showing tremendous resilience and proving to be capable of reinventing themselves by going cloud-native. Here’s just shortlist of the benefits:
- Focus on your business—Freeing yourself from infrastructure to focus on your core business is the number-one benefit of going cloud-native.
- Cut costs—No need to buy expensive equipment to anticipate future capacity that largely remains unused. You pay only for what you use.
- Facilitate better cash flow—You can transform capital expenses (CAPEX) into operating expenses (OPEX). These costs can be treated like utilities and (predictably) paid monthly or quarterly as expenses rather than depreciated on your balance sheet
- Support the new distributed remote work environment—No more worries about installing—and troubleshooting—software on each employee’s device. Everything lives in the cloud.
- Access data more easily—Your data is available from anywhere with an internet connection.
- Innovate, innovate, innovate—You can now rapidly respond to customer needs in a way that helps you achieve enduring success—no matter what happens in the world.
For more on small business, check out the Work section of the Quantum Fiber Explore blog. Here are a few to start with: