UK SMB cloud market set to grow by £1bn over next three years

The UK SMB cloud market will grow to £2.5 billion by 2016, up from a current annual run rate of £1.4 billion, according to research by cloud hosting firm Parallels.

The company's third annual SMB Cloud Insights report examines how SMBs use different cloud services, which the report splits into IaaS, web presence and web applications, hosted communication and collaboration, and business applications.

Of the four categories, IaaS is the largest in terms of value, and grew 22 per cent from last year, reaching £574 million.

This is followed closely by business applications, which includes file sharing, instant collaboration, CRM, and support and helpdesk, which is valued at £474 million.

The smallest sector is hosted communication and collaboration, consisting mainly of hosted premium email and hosted PBX, and this is valued at just £52 million.

Nevertheless, Parallels found this is the fastest growing of all four divisions, and predicts the market will more than double in size to reach £124 million by 2016.

The research also shows that 22 per cent of medium-sized SMBs are using a hybrid cloud architecture, although the company attributes this to commitments to existing on-premise investments.

However, as this technology ages, Parallels believes organisations will move over to full public cloud, accelerating the growth of the IaaS sector.

John Zanni, Parallels’ CMO, said: “The UK cloud services market for small and medium businesses is almost twice the size of the French or German markets. The demand for IaaS and business applications, which accounts for 75 per cent of all SMB needs, is continuing to grow.

“Looking forward, the UK will continue to experience strong growth across all cloud services and will remain among the most mature SMB cloud markets worldwide.”