Digital Planet: As Confidence in Cloud is rising, is Investment to Follow?

Boosted cloud computing confidence will lead to increased investments in it, according to a recent study of more than 200 venture capitalists featured in Business Cloud News.

The article states that cloud technology has been the strongest investment sector three years in a row. Bobby Franklin, chief executive officer of the National Venture Capital Association, notes that a combination of improved fundraising, a maturing IPO market and game-changing startup companies is helping spur even more investor interest.

For cloud service providers (CSPs) looking to find a niche in the widening field of innovative players, what’s the best way to access this capital flow?

Top Performer

According to the Global Venture Capital Confidence Survey, while biopharmaceuticals and robotics enjoyed the largest amount of confidence growth year-over-year, the cloud still took the top spot with a confidence rating of 4.18 out of 5. Mobile technologies — many of which rely on cloud-based platforms — ran a close second at 4.05, and the newly introduced Internet of Things (IoT) category slid into third place with a score of 3.95.

Cloud investment is also moving cross-country. Although Silicon Valley and San Francisco topped the list of locations drawing investments with $15.2 billion, New York City and Boston are moving up the ladder at $4.5 billion and $3.2 billion, respectively. The bottom line is that cloud technologies, in the form of pure plays and associated offshoots such as mobile and the IoT, are top-of-mind for venture capitalists.

Driving Growth

As noted by The Business Journals, cloud computing confidence isn’t limited to investors — up to 90 percent of small and midsize businesses (SMBs) have moved at least a portion of their business to the cloud.

However, there is a problem. Many businesses that have adopted the technology aren’t seeing the improvements they expected. In other words, while confidence in the technology is at an all-time high and prompting greater investment from capitalists and companies alike, many SMBs aren’t sure how to maximize their spending after budgets have been tabled and cloud deployment gets rolling. This is valuable information for CSPs.

For CSPs looking to find a niche, this divide offers a unique opportunity, since companies want to invest but aren’t sure of the most effective route. CSPs can pick up the slack by providing a clear path between investment and return, allowing SMBs to focus on what they want to spend rather than figuring out how best to spend it. In effect, CSPs can take on the role of full-time cloud consultants and take the pressure off SMBs to supply their own cadre of experts.

For example, SMB decision-makers may be convinced that to own their market vertical, they need to make better use of the cloud. However, with myriad services and providers, the choice is difficult. Is it better to spend everything in one place or diversify across multiple offerings? If CSPs can position themselves and their staff as expert cloud advisers, the result is a specific value-add for C-suite executives, rather than a blurry cloud landscape. This, in turn, drives CSP profit.

Cloud confidence is on the rise, and investment will follow. Venture capitalists and SMBs are willing to spend, so CSPs must be ready to serve.

By Doug Bonderud

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