According to the DigitalOcean 2023 Currents report released today, even though the economy is challenging, small and midsize businesses (SMBs) are optimistic about growth and continue to rely on the cloud.
DigitalOcean has largely built its business as an alternative cloud to Big Three public cloud providers Amazon Web Service (AWS), Microsoft Azure, and Google Cloud by focusing on developers and helping SMBs. As such, the company has some unique insights into what SMBs are doing with the cloud, even as the overall economy is facing challenges with inflation and slowing economic growth.
Among the key highlights of the report:
- Small and midsize businesses have a positive outlook for the year.
- 61% of small businesses are embracing AI.
- SMBs are increasingly hiring software developers.
- Side hustles are leading to new small-business growth.
For DigitalOcean CEO Yancey Spruill, the prevalence of side hustles — that is, alternative forms of revenue generation beyond an individual's or SMB's primary focus — was not a big surprise. Fifty-two percent of the respondents to the DigitalOcean report indicated that they have a side hustle in addition to their main income source. The growth in side hustles is a good thing for the cloud business, he said.
"Regardless of the type of 'side hustle' — whether you've created your own e-commerce clothing company or are developing an app — you must have a digital presence to survive in this day and age," Spruill told ITPro Today. "One thing we've learned from the pandemic is that this typically involves the cloud in some capacity."
Spruill added that with SMBs reporting a multiple cloud YoY increase of approximately 15%, it's clear that growing use of the cloud will play a critical role in side business growth.
DigitalOcean Current Report Reveals SMB Demand for AI
The DigitalOcean report also identified a very clear demand for artificial intelligence (AI) by SMBs.
AI and other technological advancements are catching on quickly, with 61% of SMBs expecting usage of AI to increase this year, Spruill said. The report also found that 70% of SMBs have used ChatGPT in some capacity.
"With its ease of use and economic efficiency, cloud computing is making this possible, and SMBs are looking toward what the future may hold for the parallel growth of the cloud and these emerging technologies," Spruill said.
Cloud Cost Optimization a Key Focus for SMBs
Not surprisingly, the report notes that cost is the top factor for 72% of SMBs when choosing a cloud infrastructure solution.
Optimizing cloud spend isn't always an easy task for SMBs either.
Spruill said it's understandable that smaller businesses might be at a loss when it comes to knowing how to optimize cloud costs. That is an area where DigitalOcean is focused on providing options to organizations that have a small budget and a smaller team (if any) of cloud experts, he said.
"Another way we can help them manage cloud spend is by offering usage-based pricing, so they're never paying for what they don't need or use," he said.
Looking forward in an uncertain economy, Spruill still sees plenty of reasons for optimism, particularly for SMBs in the cloud. He doesn't expect layoffs — particularly in tech — to come to an end just yet. As such, he anticipates tech workers will continue pivoting toward entrepreneurial opportunities and continue to build side hustles into small businesses.
"Unfortunately, no one can predict how the economy will fare over the next six months, but if we can turn things around, it's likely we'll see an increase in those who want to scale their business to the next level," Spruill said. "I think we will also continue to see an interest in emerging technologies like AI, and generative AI in particular, grow amongst SMBs and startups — both internally for operations and externally in creating their own offerings."
About the authorSean Michael Kerner is an IT consultant, technology enthusiast and tinkerer. He consults to industry and media organizations on technology issues.