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Want to sell cloud computing? Focus on Millennials

Cloud computing has more than arrived in the small and medium-sized business space: The technology has reached a mature state, according to IDC research.

The market research company said 70% of small businesses and 90% of the midmarket now engage with the cloud. Christopher Chute, vice president with IDC’s Customer Insights and Analysis Group, said the average number of cloud apps in use among small businesses is four, while midmarket companies employ eight on average.

“Once we reached majority-adoption status, and see more than an average app rate of one or two, we consider this a milestone where the market has reached critical mass,” Chute said.

The numbers should interest channel partners, many of which focus on the small and medium-sized business (SMB) space as their key market. But cloud services providers, managed service providers and other partners looking to tap the SMB segment would do well to update their marketing plans. IDC suggests the following measures:

Look for customers with Millennial IT leaders

IDC believes cloud sellers must develop an IT leadership generational go-to-market matrix, noting clear differences in the spending patterns associated with Millennial IT leaders (aged 35 and under) versus IT leaders in other generational cohorts (Gen-X and Baby Boomer). An IDC report published this month, U.S. 2016 SMB Enterprise Application Migration Survey: Watching Midmarket Move to a Cloud-First IT Environment, found that Millennial-led midmarket companies are much more likely to adopt software as a service beyond storage or e-commerce-related services. The Millennial-led companies have adopted cloud applications such as travel, invoice, expense management and human capital management — as well as desktop as a service — at a more than 20% higher rate than the average midmarket firm.

Adjust market segmentation to incorporate IT-enabled small businesses

IDC calls IT-enabled small businesses the “new midmarket,” noting that those companies exhibit spending patterns typical of midmarket firms. Specifically, IT-enabled small businesses (50 to 99 employees) feature a SaaS adoption similar to the midmarket and adopt similar offerings such as Microsoft Office 365.

“Suppliers need to adjust their market segmentation to group these firms with their larger accounts,” Chute advised.

Package cloud services according to business role or function

Now that the market has reached maturity, cloud computing providers should begin to pursue a deeper set of capabilities, packaging cloud-related services by business function or role, according to IDC. Chute pointed to a hypothetical “CFO Cloud” service that could deliver a turnkey set of governance and financial management capabilities, semi-customized by industry.

Here are a couple of other takeaways from IDC research:

SMBs take the fight to shadow IT

IDC’s SMB cloud research focused on “sanctioned” cloud apps and services, referring to cloud activities within the internal IT staff’s purview. That is, apps/services planned, approved and deployed by the IT staff or at least sanctioned by that group. Chute said a yet-to-be-published survey found that many SMB IT leaders are including line of business input into annual spending plans as a way to fight shadow IT.

Cloud computing adoption inhibitors decline in importance

Chute said he used to track cloud adoption inhibitors, but no longer bothers. SMB leaders, he noted, are now more likely to embrace the agility that cloud provides, rather than let concerns around latency and availability serve as barriers to IT modernization.

For Millennials, and other cloud adopters, the expediency of cloud delivery has come to outweigh the traditional cloud objections.