Introducing the Tech Adoption Index: Tracking the SMB Shift to the Cloud

SMBs are increasingly replacing traditional business service providers with subscription-based SaaS products, a trend that is already disrupting the local search and marketing industry.

Every time a small business replaces Paychex with Gusto for payroll services, First Data with Square for point of sale, or drops its parts supplier in favor of Amazon, it is fueling the shift to the cloud.

To cite one example of this shift, the Local Search Association’s new Tech Adoption Index survey found 25% of small businesses have already adopted cloud based tools like Gusto and others to handle payroll and other human resources functions. Similar numbers of SMBs have shifted to the cloud for accounting, point of sale, customer relationship management and supply chain.

The Tech Adoption Index also asked business that haven’t adopted cloud technology if the plan to do so. In the CRM category for example, 27% of those who hadn’t already adopted cloud based CRM plan to do so, most within the next year.

So why are small businesses making this shift? The survey of 1,000 small businesses found that ease of use and availability of robust features and functionality were more critical to SMBs’ decision-making than cost. As functionality once available only to large enterprises moves downstream, SMBs are jumping at the chance to access this software to help them run their businesses more effectively. 

What does the shift to the cloud mean for the local search industry? As new SaaS-based business tools acquire small business customers, they will naturally want to expand their service offering to improve yield per customer and reduce churn. Some of the new services will be marketing related. Case in point, Square offers email marketing to its customers.

While this shift to the cloud has opened up a whole new competitive field for local media sellers, it has also created a new set of business opportunities as companies like DexYP are moving their business away from lead generation and toward offering small businesses tools to help them compete with larger businesses. Google, Microsoft and others with a small business focus are in the game as well, offering cloud based tools for SMBs in marketing and advertising, HR, accounting and CRM.

DexYP and Google are charter sponsors of the Tech Adoption Index.

The LSA will conduct the Tech Adoption Index survey twice annually to provide a tracking study of the SMB shift to the cloud. The LSA is working with the market research firm Qualtrics to conduct the biannual survey.

The Tech Adoption Index goes beyond the survey, offering a forecast of the SMB SaaS industry and a growing and frequently updated collection of profiles of SMB SaaS businesses. The TAI will also feature ongoing analysis of developments related to the SMB shift to the cloud, and what it all means to the local search industry.

If you want to learn more, visit the Tech Adoption Index web page. You can also PM me on LinkedIn or send me an email at [email protected]. A free report is available from the LSA that summarizes key findings from the first wave of the research.