I recently ran across  a Microsoft press release  that summarized the results of its global SMB IT and Hosted IT Index, a research study that investigates how small and midsize businesses are faring during the recession and how they use technology. The research was extensive, interviewing 3,000+ small and mid-sized companies in 15 countries.

The key conclusions are well summarized in the first paragraph of the press release:  “businesses that value IT as an enabler for better business productivity and effectiveness and those that use hosted services performed better fiscally than those that do not.”   

Interestingly, more than 40% of the respondents were using hosted or cloud technology, and these companies reported revenue rises of 30% or more, despite the global recession.  On the other hand, 90% of the respondents who did not use hosted or cloud technology saw revenue decreases.  That’s a pretty strong endorsement for allocating IT budget in the direction of cloud technology!

Here at Tensoft, we’ve definitely noticed a trend towards the adoption of cloud or hosted ERP among our customers (see 10/1/09 press release).  While we could name quite a few examples of well-run companies from our customer list who choose to host their ERP systems on-premise, most of these are utilizing some form of hosted or cloud technology. 

This all makes good sense.   Most of our customers are multinational operations by the time they have 50 employees.   Building an internal IT infrastructure that can support a global operation 24/7 is a costly undertaking.  And, for many companies today, it’s a distraction from their core competencies. 

Of course, there are exceptions.   But the results of this study suggest that companies that haven’t yet tried some form of cloud technology may be making a mistake.