Trend Insights: More Businesses Moving to Cloud-hosted Services

Cloud-hosted Services: Business momentum GraphicThe business world’s rapid and widespread adoption of cloud-based business services, including phone service, will continue for the foreseeable future, according to a recent Microsoft-commissioned study called Beyond Infrastructure.1

The study found that more than 75 percent of businesses surveyed expect approximately half of their applications will operate in cloud environments within three years.

The study also found that top applications being adopted include voice services such as hosted phone systems, database, email, enterprise resource planning (ERP) and customer relationship management (CRM), virtual desktop hosting, personal productivity documents, analytics including business intelligence and e-commerce website hosting.

Why the Dramatic Shift to the Cloud?

The top reasons survey respondents gave for shifting to cloud-hosted services were led by the desire to improve the quality of their technology, to help grow the business, increase the availability of their applications, scale to demand, lower cost, increase their speed to market and add capabilities that they can’t build internally.

Cloud services have been a boon to small businesses in particular, enabling them to utilize sophisticated technology without having to deploy physical infrastructure, software and IT consultants or employees. The anytime, anywhere nature of cloud services also makes collaboration among an increasingly mobile workforce and business partners easier than ever before.

What Businesses Want in a Cloud Provider

The top criteria for selecting cloud service providers are trust, uptime, security, performance and technical expertise, according to the Microsoft survey. “Enterprises are looking for a trusted end-to-end solution, and ultimately this will involve multiple partners,” said Michelle Bailey, a senior vice president with 451 Research, which conducted the study for Microsoft.

One of the top cloud services identified by respondents is Unified Communications as a Service (UCaaS), a range of voice and telephony, chat and video conferencing that encompasses voice over internet protocol (VoIP) phone service.
In 2013, the hosted VoIP user base grew by 32 percent to five million users. Small and mid-sized companies looking for telecommunications systems that are affordable, flexible, and scalable are currently the heaviest users of VoIP business services.

A recent Frost & Sullivan study,2 found that more than 68 percent of the internet telephone services market was composed of businesses with less than 50 users in 2013, a trend expected to continue over the next five years.

In addition, mid-sized and large business use of the technology is also expected to increase. All hosted internet telephony and Unified Communications & Collaboration (UCC) services users will grow by a compound annual growth 27.4 percent from 2013 to 2020, according to Frost & Sullivan.

Support for the Mobile Workforce

The trend toward cloud service adoption is also being driven by the need to support a growing mobile workforce and the ability to gain faster access to advanced features and capabilities. Security, reliability and price are also important factors in system selection as are technology maturity, cutting edge features and a technology portfolio.

Learn more about the rapid adoption of cloud-based phone systems in our Inside the Business VoIP Revolution eBook.

1Beyond Infrastructure: Cloud 2.0 Signifies New Opportunities for Cloud Service Providers, a Microsoft Corp.-commissioned study conducted by 451 Research LLC and published in March 2015

2Analysis of the North American Hosted IP Telephony and UCC Services Market was published in August 2014 by Frost & Sullivan

About Dory Trinka

Dory oversees data-driven marketing programs for Vonage Business. She has an extensive background in managing data, analytics and direct marketing programs for Fortune 500 companies.

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