Klaus Holse, Microsoft Area Vice President of Western Europe, talks about the positive outcomes of a recent Europe-wide SMB business survey.
Europe may be in the grip of an economic crisis, but the region remains, in many ways, fertile ground for young or small companies. Despite the prevailing pessimism dominating headlines, we’ve actually seen a host of positive initiatives aimed at start-ups recently, from the European Commission’s proposed new regulation that’s designed to make it easier for venture capitalists to lend money to start-up businesses, to a new scheme aimed at helping small and medium sized businesses (SMBs) get loans for R&D.
Things aren’t all bad. The results of a new study we’ve commissioned among 2,100 European SMB owners actually suggest –encouraging signs of optimism.
Firstly, there’s little sense of helplessness in the face of the economic storm. A majority (61 per cent) of SMB owners across Europe feel their business can make a positive difference to the region’s economic woes. In another demonstration of rolling-up-the-sleeves, two thirds (64 per cent) say it is “businesses like mine that will be most responsible for providing the jobs and innovation to bring back the good times.” Given the fact that the vast majority of businesses in Europe are SMBs – around 99 per cent according to industry data – this is clearly A Good Thing.
Secondly, there is a strong sense that SMB owners are feeling more confident than pessimistic about their chances of success in 2012. Nearly six times as many respondents expect to be more successful (28 per cent) as less (5 per cent), and this positive outlook extends to anticipated job creation: 24 per cent of SMB owners say they expect to hire new staff compared to just seven per cent who think they will need to make redundancies.
There are variations between countries, of course. Although 28 per cent overall said they expect to be more successful in the next eighteen months, the figure was 40 per cent in Sweden, 39 per cent in the UK and 38 per cent in Russia. By contrast, Greece (25 per cent), Italy (23 per cent) and Spain (15 per cent), for example, are notably behind.
In some instances this is understandable; Greece, Italy and Spain are arguably more under pressure economically than some other European countries so it is natural that respondents there would not be as positive as elsewhere. Nonetheless, in every country in which the research was performed, a greater percentage of SMB owners expect to be more successful in the next year than less.
That SMBs can make – and, importantly, believe they will make – a positive difference is something we agree with passionately. At Microsoft, we’ve long espoused the ability of small businesses, when armed with the best tools, technology and business support, to drive growth. Now we’d extend that argument to say that, although it won’t be easy, tech-savvy SMBs can help Europe grow its way out of the crisis.
The SMBs we talked to agree. Two thirds (65 per cent) of respondents said that computing technology will help their business get through the current economic crisis. In fact, 55 per cent went as far as to say the use of computer technology will be the deciding factor in whether their business thrives or just survives. Cloud computing in particular was called out as a key driver, with more than half (52 per cent) agreeing that it will become “more important for businesses like mine”, perhaps because of a rising awareness of the tangible benefits: almost half (49 per cent) of SMBs in our survey that are using cloud services report that their business is more flexible, 45 per cent say it is saving money, 39 per cent say it is more productive, while a quarter say it has made them more innovative.
A big heavy underline is drawn beneath these benefits by the Centre of Economics and Business Research, which last year released a report saying cloud computing will add $1 trillion in productivity to the world’s top economies over the next five years.
But – and there is a but – we know that cloud comes with its caveats. We know that data privacy and security remain concerns for SMBs: 44 per cent of respondents have concerns that cloud services are unproven and risky and 30 per cent agree that “data is not secure in the cloud.” In addition, 71 per cent say they want to know where their data is located.
To some degree, I think that represents a deficit between perception and reality: I can assure any small business or start-up they will get greater levels of compliance and security by putting their trust in Microsoft’s world-leading data centre in Dublin rather than a server in the corner of their office. But when it comes to addressing that deficit, showing, not telling, is the key.
That’s why today we’ve taken an exciting step – making our flagship cloud service for SMBs, Office 365, compliant with both the U.S. Health Insurance Portability and Accountability Act (HIPAA) and the EU’s Model Clauses. This makes Office 365 the first productivity service in the industry to comply with EU and US standards of data protection and privacy.
Office 365 is a great example of next-generation IT that helps small businesses compete and scale like never before, with powerful collaboration tools and minimal IT investment. Not only does it offer start-ups and established small businesses increased agility, lower cost IT infrastructure, and collaboration benefits, it’s also really easy to use. Programs like BizSpark, too, also exemplify ways that young entrepreneurs with great ideas can rise quickly – from concept to commercialization.
Kobojo, our 2010 BizSpark winner, just completed the first round of its fund-raising campaign, which has already raised a total of $7.5 million (€5.3 million). British BizSpark One company Huddle, launched in 2007 from co-founder Alastair Mitchell’s bedroom and is now used by more than 90,000 organisations worldwide, thanks in no small part to cloud-based solutions meaning they could launch and grow quickly with little initial capital expenditure costs to worry about.
Yes, times are glum, and I’d be crazy to deny that. But where there are signs of optimism, let’s seize on them. Green shoots need watering to grow. The cloud has the potential to breathe life back into the European economy by helping the SMBs that are its backbone to succeed.
I will simply say that we look forward to the opportunity to help many of the region’s small and medium sized businesses to make the most of that potential.