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Cloud spending on the rise

According to a recent report published by the International Data Corporation (IDC), cloud spending represented nearly 30% of overall IT infrastructure spend during Q1 2015, rising from 26.4% during Q1 2014.

The market research firm found that vendor sales of private and public cloud infrastructure – including storage, servers and Ethernet switches – grew by a staggering 25.1% year-on-year during Q1 to reach almost $6.3bn (£4.02bn), CRN news reports.

Private cloud spending grew 24.4% to $2.4bn during Q1, while public cloud spending increased by 25.5% to $3.9bn. Kuba Stolarski, research manager of server, virtualization and workload research at IDC said the rise in cloud spending suggests that “customers are open to a broad array of hybrid deployment scenarios as they modernise their IT for the third platform, begin to deploy next-generation software solutions, and embrace modern management processes that enable agile, flexible, and extensible cloud platforms.”

In its Worldwide Quarterly Cloud Infrastructure Tracker report, IDC predicts that overall cloud infrastructure spend will rise by 26.4% this year, reaching £33.4bn and representing one third of overall IT spend. In particular, public cloud spend will grow by 32.2% year-on-year to $21.7bn, while private cloud spend will increase by 16.8% to $11.7bn.

IDC forecasts that cloud spending will rocket over the next five years and will account for nearly half (46.5%) of all IT infrastructure spending by 2019, reaching $54.5bn.

Meanwhile, according to Computerworld’s annual forecast survey, 43% of firms plan to increase their overall IT budgets this year, by an average of 13%. A total of 194 IT professionals were polled for the survey, with 40% stating that cloud computing will take the lion’s share of their budget increase, closely followed by software as a service (SaaS).

Cloud computing was rated as the most important consideration among IT departments this year, cited by 16%. Firms which have already adopted cloud strategies will this year seek to streamline services and improve functionality in order to reap the full benefits of the cloud.

Syscap can provide flexible finance plans for businesses looking to invest in new technologies, and can fund a number of aspects in one comprehensive payment plan including hardware, software, cloud based and subscriptions as well as training, installation and maintenance. To find out more about how Syscap can help to support your business’ technology ambitions, click here or contact us today.

A Look Back: How SME Funding For IT Has Evolved

There is no underestimating the importance of small and medium-sized enterprises (SME) for the UK: the market is a key driver of economic growth and contributes greatly to the GDP. Statistics released by the Department for Business, Innovation & Skills (BIS) last year found that 99.9% of the 5.2 million private sector businesses are SMEs, which together represent an annual turnover of £1.6 trillion. SMEs dominate the industrial market and account for 60% of private sector employment.

Needless to say, supporting SMEs is vital for economic stability and growth; something which has been addressed by all key political parties in the run-up to May’s general election. For our part, we have been committed to this market since our inception in 1990, helping business to acquire the finance they to need in order to succeed and grow.

Obviously, the financing climate has changed a lot since our business venture began. Here, we take a look at how funding for SMEs has evolved over the past 25 years:

A brief history

At the start of 1990, and indeed through to the start of the millennium, businesses like our own were experiencing significant growth. In a recent article, Dr Khaled Sofani, Senior Teaching Faculty member in Finance at the University of Cambridge, attributes this growth to a range of factors: the end of the Cold War, the removing of financial regulations, and China gaining significant economic power.

There were also two more reasons. The first, of course, was the rise of the internet. The world wide web helped facilitate business-consumer engagement and for the very first time, businesses could reach customers across the globe without having to establish a physical presence in those countries. The second reason was that it was relatively simple for SMEs to acquire funding at the time which, as Dr Sofani states, was due to the fact that private equity funds and venture capitalists were both able to seek funding from financial organisations with ease.

During this time, the banking market was overcrowded with companies wanting market share. And, with credit being easily accessible for SMEs, they were able to grow and succeed, creating more job opportunities and boosting economic confidence.

Then everything changed

But then, the financial crisis hit and everything changed. Many banks and financial organisations went bust, or at the very least found themselves facing severe solvency and liquidity issues. Banks and other funding houses were forced to become far stricter in their lending terms; they became much more constrained and risk averse, making it increasingly difficult for business to acquire the funding they needed. According to BIS statistics, bank lending peaked during 2009 and since then, it has been declining year-on-year.

In the years that followed the financial crisis, there was huge uncertainty in the market. Aware of this, SMEs were holding off investment plans: in the six months leading up to February 2011, there was a 19% reduction in application value for small businesses applying for new term loans and overdrafts. A total 3% of SMEs at that time admitted to delaying borrowing because of the climate.

At times of economic instability, SMEs are at a significant disadvantage. Whereas larger companies are able to cut costs by doing things like limiting their services, losing employees or restructuring, this is virtually impossible for smaller businesses with little space to manoeuvre. Plus, cuts to alternative finance solutions during these times leaves small businesses increasingly vulnerable, as they often rely on short-term credit, loans and overdrafts for their day-to-day operations.

Today

Yet now, years on from the financial crisis, the economic climate has significantly improved, and confidence in the market is returning. SMEs have the tools they need to grow and succeed, and individuals that were perhaps apprehensive before now feel encouraged to begin their own business ventures. In fact, the number of SMEs has increased by 1.8 million since 2001, up 51%. And these businesses aren’t just confident in the market but in lending, too, with the government’s latest SME Business Barometer report showing that 77% of SMEs seeking finance last year thought they would be successful.

Despite the numerous challenges, the SME market soldiers on relentlessly. What is needed going forward is assurance by the government, banks and financial providers like ourselves that we are able to continue supporting this market in any way we can. SMEs are the lifeblood of the UK economy and we must ensure that their needs, both financial and other, are met.

Syscap is a leading provider of finance solutions to this market. If you are a small or medium-sized business, we are able to offer short-term business loans, finance for your new assets, and provide finance for your IT needs. Contact us today.

Software isn’t as easy as it looks

When it comes to IT investment, many SMEs view software as somewhat inferior to, or less valuable than, hardware. These businesses allocate large portions of their IT budgets to purchasing tangible hardware products, often neglecting software investment in the process.

However, contrary to popular belief, software is just as important as IT hardware. Businesses must remember that quality software is needed to run their hardware, so it should be viewed as an equally worthy investment.

So, why do so many businesses prioritise hardware? Well, firstly, when businesses purchase hardware, they have visible proof of investment. Within many companies, IT managers find it easier to get approval for buying hardware, as those in control of the budget often want to see physical proof of where the money went. There is also a common misconception that software is ‘simpler’ to create: if software such as apps can be created from a bedroom, then why does it deserve such a significant investment?

Software includes everything from operating systems and application servers, to databases and apps. In reality, the software market is extremely sophisticated and complex; programs require a huge amount of time, money and effort to create.

Not making timely investment in software could negatively impact your business. For example, delaying necessary software upgrades and using outdated systems will inevitably result in increased costs in the long term. What’s more, using older software could affect staff productivity and pose a security risk.

There is no doubt that software delivers good business value. Companies must understand that business value is created through investing in exactly what their business needs, and not just cheaper alternatives.

Companies often struggle securing a finance package for their IT investments, as many funding houses only provide financing for hardware and not the intangible aspect of these investments. Syscap, however, offers both hardware and software funding, allowing you to purchase the technology you need today. Not only that, but Syscap can also provide funding for subscription services, support and maintenance, training and installation. This allows businesses to finance the full IT solution, spreading the cost over time and maintaining working capital.

Click here to find out more about the benefits of financing your next technology solution.