SMBs Boost AI Budgets, Europe Shifts from US Cloud, US Manufacturing Sentiment Declines

[00:00:02] It's Monday, April 21st, 2025 and I'm Dave Solt. SMBs and APAC are doubling down on AI and hybrid cloud with most increasing third-party spending but not outsourcing entirely. Europe eyes alternatives to US hyperscalers as digital sovereignty concerns mount. US manufacturing sentiment sinks despite a brief output bump. And Synology tightens its grip on hardware hinting at creeping vendor lock-in. This is the Business of Tech.

[00:00:33] A recent report from Forrester, commissioned by Crayon, reveals that small to medium-sized businesses are increasingly relying on third-party service providers to enhance their capabilities in artificial intelligence and cloud solutions. The report, which surveyed 637 senior leaders across Australia, New Zealand, India and Southeast Asia, found that 31% of respondents plan to combine their in-house teams with external providers to improve their AI capabilities within the next year.

[00:01:01] Furthermore, 72% prioritized tech-enabled experimentation. The survey identified a significant interest in artificial intelligence with 83% experimenting with free AI tools, despite many not planning to implement the technology in the near future. Notably, 47% of respondents intend to manage their workloads on hybrid cloud solutions over the next two years.

[00:01:25] Additionally, 87% of businesses reported increasing their budgets for third-party services, with 14% planning to increase spending by over 20%. The report emphasizes the critical role that external service providers play in helping SMBs navigate challenges related to stakeholder management and strategy alignment in their AI and cloud transformations.

[00:01:47] European customers are increasingly considering alternatives to U.S. cloud service providers, driven by concerns over reliability, pricing and data security. At the recent KubeCon EU event, discussions highlighted the growing interest in local cloud solutions, with reports indicating that inquiries for services from companies like Nextcloud have tripled.

[00:02:10] Mark Boos, CEO of Civo, noted a significant shift in attitudes as organizations fear that U.S. providers could abruptly cut services due to geopolitical tensions. The major players, Amazon Web Services, Microsoft and Google, currently dominate approximately 70% of the European cloud market. However, stakeholders are now questioning the control these companies have over their data, reflecting a broader trend toward digital sovereignty in the face of uncertainty.

[00:02:40] As organizations weigh their options, a methodical transition to trusted local providers may be necessary, though some are seeking rapid moves away from U.S. hyperscalers due to perceived threats. And manufacturers in the United States are bracing for challenging business conditions, as many anticipate a recession-like state due to ongoing trade tensions.

[00:03:02] Recent surveys indicate a significant decline in optimism among factory owners, with the New York Federal Reserve reporting the second-lowest outlook in over 20 years. The Philadelphia Reserve's survey also reflects this negativity, showing negative indicators for general activity, new orders and shipments. Employment remains steady for now, but future hiring intentions have dropped to their lowest since 2016.

[00:03:29] In contrast, manufacturing output rose by 0.3% in March, aided by a surge in auto sales ahead of impending tariffs. This juxtaposition highlights the volatility and complexity of the current manufacturing landscape. Why do we care? Well, the Forrester report signals rising demands from SMBs for AI capabilities. But crucially, 31% plan to combine in-house and external resources, not fully outsource.

[00:03:59] This underscores a hybrid expectation. Advisory plus enablement, not just delivery. Note that many SMBs are in exploration mode, not implementation. Providers that push too aggressively on AI projects could hit resistance, wasted effort, or client frustration. And that 87% figure sounds bullish, but if it's all targeted at advisory and pilot projects, traditional managed services might get squeezed.

[00:04:26] Providers banking on business as usual service contracts could find themselves disintermediated. So some guidance. Develop AI readiness assessments and pilot frameworks that help small customers go for free tools to structured investment. Start building relationships with local cloud infrastructure providers, especially if you serve Europe. Pivot from we run your tech to we help you strategically use technology.

[00:04:54] Advisory services aligned to boardroom concerns will be worth more than tickets close. Today's episode is supported by Huntress. Most cybersecurity solutions are built from massive enterprises with big budgets, not Huntress. They're the fully managed cybersecurity platform built for all businesses, not just the 1%. Huntress purposely builds security solutions like EDR, ITDR, SIM, and security awareness training

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[00:05:49] To see how their expert threat hunting team gets the job done, visit Huntress.com slash MSB Radio. Synology is set to implement new restrictions on the use of third-party hard drives in its future network-tached storage devices. Starting with models released in 2025, only Synology-branded drives and those certified by the company will be supported for full functionality, limiting users' choices for storage options.

[00:06:19] This change follows extensive internal testing, which Synology claims shows that drives meeting their strict validation processes are less prone to failure and compatibility issues. Current users of Synology devices will not be affected, and the restrictions will not apply to earlier models or drives migrated from existing systems.

[00:06:40] The company emphasizes that these measures are intended to improve system reliability and performance, although they may frustrate consumers seeking cost-effective storage alternatives. Why do we care? Synology tends to be very popular with S&B-focused MSPs, and Synology's shift to restrict third-party hard drive use is a clear sign of vendor lock-in tactics creeping deeper into hardware ecosystems. And that affects MSPs in both cost and operational flexibility.

[00:07:10] Many MSPs embrace platform standardization, and Synology has long been a favorite for NAS due to reliability and ease of use. This move undermines the trust by introducing unpredictable restrictions tied to hardware SKUs, potentially forcing a platform re-evaluation for forward-looking deployments. So this is your Heads Up. And I want to update on the story of Defense Secretary Hedgsef and his use of signal.

[00:07:37] U.S. Defense Secretary Pete Hedgsef reportedly shared sensitive data regarding the March 15th military strikes in Yemen during a personal signal chat, which included family and friends rather than government officials. According to the New York Times, the conversation involved flight schedules for F-A-18 Hornets targeting goofy positions, similar to information previously shared in a separate chat that mistakenly included a journalist.

[00:08:04] The newly revealed chat, created by Hedgsef in January before his confirmation, included approximately a dozen individuals from his personal and professional circles. Sources indicated that while the group chat was informal, AIDs advised Hedgsef against discussing sensitive military operations, urging him to use his government phone for such matters. Despite these warnings, he continued to use private chat to communicate regarding the strikes.

[00:08:33] Why do we care? This is a cautionary tale about operational security at misuse and the human layer of cybersecurity, all of which directly impact how MSPs should advise clients. When leaders break protocol with impunity, it erodes trust in security culture. If the defense secretary can knowingly ignore guidance and share sensitive operational details in an unsecured chat with friends and family and face no apparent consequences, what message does that send?

[00:09:04] Cybersecurity isn't just about tools or policies. It's about culture and leadership modeling behavior. When top officials disregard best practices, it legitimizes non-compliance across the organization. To sell cybersecurity, encourage policy with teeth. Tie violations regardless of role to clear consequences or don't expect buy-in from anyone else. Thus, it's important to hold accountability for Secretary Hedgsef.

[00:09:34] This episode is supported by Comet Backup. As IT providers, we've all been there. The phone rings, your largest client is absolutely panicked. They need you to restore their data as soon as possible. That's where Comet Backup comes in. Comet is an all-in-one backup solution designed specifically for IT professionals. Whether you need to protect computers, servers, virtual environments, emails or databases, Comet Backup empowers you to manage backups on your terms. You choose where the data is stored.

[00:10:03] Backup to local on-prem storage or any of the leading cloud providers. Visit CometBackup.com to start your free 30-day trial today. Get $100 free credit when you sign up with the promo code MSPRADIO. Comet Backup, the backup solution that MSPs trust. Thanks for listening. Today's National Chocolate-Covered Cashews Day. I'll be speaking on a webinar tomorrow, April 22nd, about inbound marketing in the AI era with the author of a new book.

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