Two-thirds of small businesses plan to cut cloud spending

With cloud costs expected to increase by 10% this year, SMEs plan to cut the amount of data they store in the cloud or slash spending on cloud services

Braced for a 10 per cent increase in cloud costs this year, almost two-thirds of smaller business users plan to cut cloud spending to combat rising costs.

One third of SMEs plan to reduce the amount of data they store in the cloud and 24 per cent to reduce the number of cloud services they use, according to business internet service provider Beaming.

Beaming’s Making the cloud work for UK businesses report, which draws on a study of SME leaders conducted by Opinium, reveals that, on average, UK SMEs spent almost 2 per cent of their turnover on cloud services in 2022. This amounts to more than £4 billion in cloud spending across the whole population.

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Although more than a quarter (27 per cent) of SMEs initially adopted cloud to reduce computing expenditure, companies expect a 10 per cent increase in the cost of cloud services during 2023. Several major cloud providers have introduced double-digit price increases for services used by SMEs this year, including IBM, which last week announced plans to increase cloud prices by up to 29 per cent.

Facing increases in the cost of cloud computing that far exceed inflation, just one in five (20 per cent) SMEs that use the cloud said they would absorb the extra costs.

One in six SMEs (17 per cent) plan to move data or applications from the cloud onto on-premise servers.

Sonia Blizzard, managing director at Beaming, said: “While the cloud has delivered many benefits to businesses, the cost of cloud has been creeping up for some time now, and at some providers, that creep is starting to look unjustified to businesses dealing with wider inflationary pressures.

“Many SMEs, some of which rushed to the cloud to support remote working during the pandemic, are questioning the value of these services for the first time and taking action to get on top of those cost increases.”

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...