Why Small Cloud Companies Have An Advantage Right Now

Guest author Per Ek is the executive vice president of CloudMe, a European sync and storage service.

The race is heating up for cloud companies, as some of the largest players battle it out over how much storage they can offer and at what price point. That may seem like a great thing—who wouldn’t want more cloud storage for less?—but the reality is that everything has a cost. In this case, the price may be innovation and sacrifices in the user experience. 

See also: How To Choose A DBaaS For Database Management

However, this may be a great opportunity for smaller tech companies willing to take up the mantle of cloud innovation. In fact, smaller tech companies that support the free flow of ideas may be better innovators anyway, since larger organizations are often bloated, and mired in “red tape” and corporate politics. In a recent study from BPI Network, which surveyed 250 executives at firms of all sizes, roughly 40 percent said that their industries were being up-ended by startups. Meanwhile, 57 percent believe that big organizations make things harder on themselves by resisting change.

Innovation matters in all aspects of technology, but that’s especially true for rapidly growing sectors like the cloud services. Here’s how smaller players may be better positioned to push this industry forward.

Freedom of Innovation

The cloud refers to the software and services that run online instead of locally on your device and, unlike many areas of technology, it holds some staying power. The tools behind it may mature, but 5 years from now, no one will debut a “new cloud.”

Instead, its evolution will be in specific areas, such as feature sets, capabilities and user experience. While the major competitors quibble over price, the so-called “little guys” can focus on hiring and driving employees in areas like cross-platform and device functionality, accessibility, enhanced personalization.

Without being bogged down by excessive corporate policies or processes, smaller companies have more freedom to promote out-of-the-box thinking and cultivate off-beat ideas that can contribute to the cloud’s evolution. They are often more nimble and adaptable, and can act quickly to allocate resources or address problems. Meanwhile, their team-oriented structures can provide a supportive environment. The less hierarchical approach allows CEOs and VPs to openly collaborate with younger team members, combining experience with a fresh perspective.

Believe it or not, the tech giants are probably rooting for the little guys to spur innovation. Larger organizations are always on the lookout for companies that are bringing new concepts to the industry. Small companies with new ideas are ripe for partnerships or acquisitions. Scooping up ingenious businesses has become a common practice for the Microsofts and Googles of the world.

Consider Google’s $25 million acquisition of DocVerse. This deal wound up accelerating Google Docs, which offered users an easy way to collaborate and share information, and gave the tech giant a strong foothold in cloud documents.

Know Thy Customer

By the end of 2015, users are projected to spend more than $180 billion on cloud services. A market that size, however, will likely cover an array of vastly different customer needs.

Too bad that, in an attempt to gain the largest number of customers, providers tend to over-generalize user requirements, lumping them into one or a few one-size fits all categories. For customers, it’s tantamount to getting a self-storage service in the cloud, instead of the condominium they expected. They may have a lot of cheap square feet, but not a place to live.

Personalized services can make a difference here, if they fulfill unique individual needs and provide a rich user experience.

Since smaller companies tend to have fewer users, theoretically, it should be much easier for them to get a handle on what makes their customers tick. That’s critically important: According to Defaqto Research, 55 percent of consumers would pay more for a better customer experience. Startups that can get to know their customers, understand who they are, how they are using their services and anticipate their future needs will have an advantage. They can use the information to tailor their services.

Customers may also appreciate dealing with a smaller operation, because they can actually engage the provider more easily. If you offer increased transparency on how your cloud service operates, even better. All too often, large companies put up opaque walls that can make end users uneasy about how their data will be managed.

“More cloud storage for less” may sound like an appealing pitch initially, but it won’t be enough to keep users interested in the long term. What will keep them sticking around are cloud services that address consumer needs with some innovation—and a lot of thoughtfulness. Smaller shops have a prime opportunity right now, if they can recognize the opportunity and step up to deliver. 

Lead photo by Chris Potter

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