SMEs and the cloud, a cost-saving and efficient combination.
One of the effects of the pandemic on business is that it accelerated their digital transformation. It was no longer a choice but an obligation and many companies, especially SMEs, still need training and advice to cope with this transition.
October 5, 2021
The covid-19 health crisis has undoubtedly accelerated the digitalisation process of Spanish companies by three to five years. But also of society: 50% of employees worked from home during the hardest times and e-commerce increased by more than 20% across Europe. In this sense, the pandemic highlighted the value of the technological transformation of businesses to gain in competitiveness and resilience and to be able to adapt to the new times, which experts say are here to stay.
Covid-19 forced industries to look at aspects such as telecommunications, artificial intelligence and the cloud from a different perspective. For many unknowns, and for others a first step in their strategic innovation.
Beyond a global, and necessary, digital literacy, companies that did not want to be left behind last year needed the advice of expert partners in the most innovative technologies on the market. This was especially true for small and medium-sized Spanish companies, the SMEs. The reality is that, currently, this process of digitisation and support is still crucial for the survival of many of them. The consequences of a technological deficit can be devastating: slow access to systems, security failures or non-fluid data traffic.
Many Spanish SMEs are not prepared for such a decisive transformation for their future. It is necessary to digitise not only to be competent, but also to be much more efficient and to be able to improve their own business model. Aware of this, Telefónica Tech - the leading company in digital transformation - cites a clear example. Migrating applications and services to the cloud can become a great ally for SMEs in tackling rising electricity prices, as it allows companies to pay only for the use they make of the equipment. Such a simple service can cut costs, and at the same time be more efficient in the use of resources.
Typically, SMEs pay for large equipment that they don't really need. They do so in anticipation of peak demand, even though, in the end, 90% of the time they are not going to use it. By installing a data centre, companies can count on a reliable service that is prepared for these specific peaks. SMEs will have the best back-up to respond to the problems they may face at the most critical times. What's more, by dealing with this service, it enables the offloading of functions from the companies' IT team as the functions are automated.
Another advantage of the cloud is the flexibility of payment. This service establishes that SMEs only pay for the actual use they make of the equipment. In this way, they optimise their electricity consumption and pay less on their electricity bills. Following this line, a report by Telefónica Tech states that current data centres can be up to four times more efficient in terms of consumption than the small data centre that an SME usually has. In other words, if small companies migrate their applications to the cloud, they could save between 60 and 70% of energy.
"While an SME has older equipment to optimise its performance and keeps it on regardless of the use it makes, data centres have more efficient hardware, which consumes fewer resources, and virtualisation technologies that increase the performance of this equipment," argues Jaime Fernández, head of Infrastructure at acens, part of Telefónica Tech.
60% ENERGY: SMEs can save 60% of their electricity costs thanks to the cloud.
90% TIME: SMEs do not use their large equipment 90% of the time
10 KWH: The consumption of a server with two processors is around 10 kWh per day.
84% EMISSIONS: SMEs working in the cloud reduce their carbon emissions by 84%.
In this regard, in 2013, a study by Lawrence Berkeley National Laboratory indicated that migrating business applications such as email or CRM to the cloud could reduce the energy consumption of these applications by up to 87%. More recently, an Accenture analysis in 2020, based on an analysis of the cloud migration experience of hundreds of its clients, found that an SME can reduce its energy consumption by 65% and carbon emissions by 84%. According to the consultancy firm, adopting a cloud migration approach can help reduce global carbon emissions, promote greater circularity and encourage more sustainable products or services. According to its study "The Sustainability of the Cloud", such migrations would reduce CO2 emissions by 59 million tonnes per year, the equivalent of taking 22 million cars off the road.
The technological improvement of data centres entails a much more sustainable reformulation of business. Cloud data traffic continues to grow - figures show that it has increased sixfold between 2010 and 2018 - but energy consumption is not increasing in the same way. This is being maintained by the latest generation of servers, which are more efficient and consume less energy. The core of today's data centre consumes a quarter of the energy it did a decade ago, and thanks to virtualisation, processing and storing data now costs up to nine times less.
The consumption of a server with two processors, typical equipment in an SME, is around 10 kWh per day. With an average price in 2021 of €0.25/kWh (almost double that in 2020), the electricity cost of the server will be around €75 per month.
Most small businesses cannot afford to invest in new, more modern servers with lower power consumption. For this reason, it is common for these companies to prolong the useful life of their equipment as much as possible, making it less efficient. In contrast, in the cloud, technology is constantly being renewed. This adaptation allows SMEs to have at their disposal more modern and powerful equipment, with higher performance and lower energy consumption. The cloud, therefore, is an indispensable tool for managing information and being able to grow at the pace demanded by constant technological updating. Whatever the size of the company.