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office365-screenScreen Shot 2016-05-31 at 2.21.49 PM (1)Adoption of Microsoft’s cloud-based Office 365 is in its infancy, with only 7.5 percent of small and medium-sized businesses in the U.S. currently using it, according to a study set for release this morning. The study, conducted by SkyKick, a four-year-old Seattle company that makes cloud-management and -migration software, surveyed 109,000 businesses with employee headcounts of 250 or less across the U.S.

Not surprisingly, Washington state — home to Microsoft’s headquarters in Redmond — had the highest percentage of Office 365 business users, with 10.1 percent. That was followed by Oregon and Wisconsin, both of which had 9.4 percent, according to the report, dubbed “State of the Office 365 SMB Cloud.”

Industries with the highest use of Office 365 are industrial (coal mining 30.9 percent, pipelines 22.7 percent, railroads 21.9 percent); tech-focused businesses (computer facilities management 21.3 percent, investment firms 19.9 percent, integrated-systems designers 17.8 percent); and white-collar business services (consultants 14.1 percent, insurance companies 13.5 percent, securities and commodity brokers 13.4 percent).

skykick-report33
Via SkyKick

Industries with the lowest adoption rates include commercial art firms; pest control firms; businesses involved in fishing, hunting or trapping; barbershops and laundry services. All had rates of 3.8 percent or lower.

Larger businesses are more likely to be using Office 365, the study found. About 16.6 percent of businesses between 51 and 250 employees are doing so, versus an average of 7.5 percent among all businesses surveyed. And businesses with more than 10 employees have double the adoption than those with fewer than 10 (13.2 percent versus 5.6 percent).

To perform the study, SkyKick used proprietary technology to analyze the email service providers for more than 100,000 company records to determine whether they were using Office 365. It then analyzed other factors, such as the market classification, using the Standard Industrial Classification codes, as well as company geography and size. Only businesses with fewer than 250 businesses were surveyed. Most — 61 percent — had between one and five employees, and only six percent had more than 50. The margin of error was less than one percent at a 0.29 confidence level.

Apple, Google and IBM all offer some cloud-based productivity suites, but Office 365 holds “by far the largest” market share, said Evan Richman and Todd Schwartz, SkyKick’s co-CEOs.

For Microsoft’s quarter ended March 31, “Office commercial products and cloud services revenue grew 7% in constant currency, driven by Office 365 revenue growth of 63% in constant currency,” the Redmond software company said in a prepared release. More than 50,000 new organizations have signed on for Office 365 each month for the past 22 consecutive months, Microsoft said.

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“Other” in this graph refers to surveyed firms’ use of on-premises email, POP or IMAP email or Google email, as opposed to Office 365’s email. Via SkyKick.

The overall low levels of Office 365 “should energize any Microsoft Partner or Cloud Services Provider,” said Richman. “As our customers are trying to build their practices, their number-one question is how much cloud is left. The answer is: lots.”

Schwartz added that the “the shift to the cloud is definitely underway, and there’s a big opportunity ahead” for IT solutions providers.

The full report may be viewed here.

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