Service providers have a big opportunity to capitalise on the UK's burgeoning cloud computing market by delivering tailored services to 'small and midsize' businesses (SMBs) over the next two years.

That's the bottom line from Parallels' SMB Cloud Insights report, which predicts that the overall UK cloud market will bulge from a current annual run rate of £1.4 million to £2.5 million by 2016, driven by year-on-year growth of 38% for hosted infrastructure, and 56% for the business applications market.

Parallels infographic

Solid infrastructure

The value of the UK's SMB cloud pie is getting fatter, says Parallels, which divides the opportunities for service providers into four key sectors.

According to the report, the first sector, infrastructure-as-a-service (IaaS), grew 22% over the past year to reach a value of £574 million. Over a quarter (28%) of UK SMEs now use a hosted server, a third more than last year, with growth driven by smaller businesses with fewer than 50 employees purchasing servers from the cloud.

The second sector, web presences and applications, will be buoyed by UK SMBs looking for web applications to complement web hosting packages (three quarters already have a website), according to the report. It predicts that the most in-demand through to 2016 will include mobile optimisation, search engine optimisation (SEO), content management system and commerce solutions.

Email opportunity

Despite being worth a smaller £52 million, the third sector, hosted communication and collaboration, is poised to more than double in market value to reach around £124 million over the next three years, Parallels says, driven by demand for hosted premium email.

Parallels lists business applications as the four sector. It says that UK SMBs will use a wider range of business applications, which will help its £474 million market value - the second highest of the four sectors - achieve "substantial growth". Business applications will grow 30% year on year through to 2016, according to the report, which points file sharing, instant collaboration, and online backup and storage as the current top applications in the sector.