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Wednesday, 16 September 2015 17:26

It’s official cloud makes your profits grow

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A survey of small and medium-sized businesses finds that UK businesses who move to the cloud are seeing higher revenue growth and more than double the profits

According to a survey by Exact, the UK business community is rushing to the cloud in great numbers and as a consequence are seeing improved revenue and profits.

The ‘Exact 2015 SME Cloud Barometer’ global research study of businesses across the UK, US, France, Germany, the Netherlands and Belgium – found those who are ‘heavy users’ of cloud software (defined as having three or more different cloud products in place) achieved far higher revenue growth and more than double the profit of those using fewer cloud products.

The study focused on small-and-medium-sized enterprises (SMEs) and found the UK has the second highest number of ‘heavy’ cloud software users (27%), just marginally behind the US (29%). This compares to 25% of SMEs in the Netherlands, 24% in Belgium and France, and just 10% in Germany. Overall, just under half of UK SMEs (47%) are now using at least one cloud business software tool.

Significantly, those who have embraced the cloud and are using multiple software products as part of their business processes showed on average 26% growth in revenue in 2015, compared to 14% among those using one or two online solutions, and 10% among those who don’t use any cloud solutions at all. 

The research found UK SMEs had the highest average net profit margins last year (2014) among all the comparison countries - an average of 20%, just ahead of those in the US (19%), but twice as much as those in France. That positivity looks set to continue with revenue growth figures for this year predicted to be 16% - nearly twice as much as expected by those in the Netherlands. 

However, very few UK businesses actually look to the cloud as a way of improving their revenues, only 10% “actively look for new solutions that help us grow” – the lowest number among any of the comparison countries – while the most popular reason given for implementing new software solutions was “when we need to replace outdated versions” (54% - higher than any other country).

For large businesses the main worry with a move to the cloud is a loss of security, however with SMEs it seems everything is turned on its head, and instead they are turning to the cloud to improve their security apart from the UK.  Better security was the main reason for switching away from on-premise software solutions or traditional pen-and-paper style processes, particularly in Germany (36%). But in the UK IT cost saving is the primary reason for UK SMEs (32%) to move to the cloud. In all cases, easy access to information was cited as the third biggest benefit for moving business and finance processes online.

It also seems that there is real evidence that a move to the cloud does improve security. Those SMEs in France, Germany, The Netherlands and Belgium that have moved business and finance processes to the cloud have seen a considerable decrease in the number of security incidents – particularly those in France who experienced a 20% fall. The number of security incidents experienced by those in the US and the UK largely remained unchanged – UK SMEs as whole saw a 1% drop after the switch, although UK manufacturers reported a 10% drop. 

When it comes to financial challenges and how technology can help address those, getting customers to pay on time is the top issue facing UK SMEs (40%), followed by cash flow management (33%). These concerns are clearly justified; according to the research, 11% of UK SME’s invoices are paid late, and 2% are never paid at all. UK manufacturers are particularly affected by late payments (16% are overdue) while wholesale & distribution businesses are most affected by invoices never being paid (5%). 

These financial concerns might explain why among those cloud adopters who took part in the poll, accounting software is the most popular business tool being used (27%). 

“Few business leaders would argue with the fact that having the right software tools in place can be vital to success,” said Erik van der Meijden, CEO of Exact. “In fact, 63% of the SMEs who took part said they felt that technology is going to have a strong impact on the competitive landscape in their market over the next three years.”

Lucy Fox, General Manager, Cloud Solutions at Exact UK, added: “There is a real opportunity here for UK SMEs to build on the success and status they hold on the global stage. To do so, businesses need to ensure they stay competitive, efficient and provide the very best in customer service. Cloud adoption levels appear to be growing and highlighting the tangible benefits it can offer through research like this will hopefully encourage more UK SMEs to follow suit.”

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