Small Business Technology Blog

Monday, February 19, 2007

Top 10 SMB IT trends for 2007

New York-based analyst firm Access Markets International (AMI) Partners, Inc has released a new projection of the top 10 IT trends for global SMB markets, I've highlighted all the Small Business Related Trends for those of you who like me, Skim instead of reading these long reports :)


#1: SMB spending In North America and Japan Will Surpass Large Business IT Spending In 2007

AMI forecasts the worldwide IT spending by SMBs to grow by 10 per cent in 2007, fueled by continued high double-digit growth in countries in the Big Four (BRIC -- Brazil, Russia, India and China) category. 2007 will also see the fall of the majority share of IT spend by large businesses in Japan and North America. For the first time, SMB IT spending is poised to surpass spending by large businesses there. Such a trend has already occurred in other regions -- Asia Pacific, Europe and Latin America.



#2: Storage and security convergence will push SMBs up the adoption curve.

Storage and security solutions will continue to converge, leading to market consolidation. SMBs will be more inclined to adopt dual-purpose solutions as they check their budgets against investment priorities. AMI forecasts storage and security spend will grow by 19 per cent in 2007. Storage optimization will be seen as an imperative among mid-market businesses. 2007 will also see the introduction and adoption of "All-in-One network storage appliances" for the less than 250 employee segment.



While SMBs are rapidly implementing basic PC security solutions such as anti-virus, spam filters and spyware, many SMBs have yet to deploy more comprehensive server and network-based security schemas that would provide for more robust, end-to-end protection against the rising tide of security threats. In 2007 SMBs will direct new spending on more advanced security solutions, such as intrusion detection, secure identity and access management, web filtering, encryption, and automated patch management.



#3: Software-as-a-Service (SaaS) vendors turn to chapter two.

SaaS Chapter One was all about selling companies on the scale and skill advantages that SaaS provides. In Chapter Two, SaaS vendors will increasingly focus on how their solutions help customers streamline business processes for market advantage. Chapter Two will also see a continuation of SaaS industry consolidation, as powerhouses such as Microsoft, Google, IBM and salesforce.com battle to build "uber" SaaS ecosystems. At the same time, new SaaS players and solutions will continue to emerge, and the likelihood of any one player or ecosystem dominating the landscape is slim to none.

#4: Managed services shape up

AMI's global primary research results indicate that SMBs are increasingly likely to offload cumbersome IT chores to outside experts, so they can focus on their core business. AMI predicts vendors will offer SMBs more inclusive IT-based managed services packages over the next year. Though initially aimed at testing the waters among early adopter and mid-market businesses, these services will go beyond the piecemeal approach, building towards more comprehensive portfolios.


#5: Outsourcing Revisited

AMI forecasts that the traditional IT services market will continue to see double-digit growth in 2007 among global SMBs as an increasing number of businesses spend on different types of services. "Business-as-a-service" outsourcing will gain ground, with different components of human resources (HR) including recruitment services, background checking, payroll, employee self-service and HR administration leading the way in 2007. SMBs are continually looking for ways to streamline their business processes and lessen the burdens of regulatory/compliance concerns. With focus on micro-verticals by IT vendors and as IT becomes secondary, AMI predicts that in 2007 and beyond vendors will create micro-vertical offerings for SMBs catering to their specific business processes with "embedded IT."



#6: Even more mobility

The number of municipally funded Wi-Fi/WiMax projects is soaring, with cities large and small participating. (The Technology Coach Adds: Including Toronto's Hydro One Downtown Wireless Network Now available FREE Till March 2007!) 2007 will see fixed mobile convergence between fixed IP infrastructure/applications and mobile (cellular) infrastructure/applications with increased focus on ubiquitous mobility.

AMI predicts that global SMB notebook shipments will grow by 20 per cent in 2007 over 2006, outpacing desktop PC growth by five times. Combined with the SmartPhone shipment growth of 18 per cent globally, SMBs will increasingly depend upon mobility and convergence as the use of public wireless internet will grow by over 30 per cent. The year will finally see the arrival of WiMax, which will take off first in key countries in Asia, followed by Europe and then the US.

# 7: NOT Windows Vista, which is still 12 to 18 months or more away from widespread SMB use

Despite all the hype about pent-up demand for Vista, 17 per cent of mid-market businesses, and less than seven per cent of small businesses in the U.S. plan to adopt Vista in the next 12 months, according to AMI's U.S. small and medium business survey.

Most SMBs tend to take a wait-and-see attitude when it comes to deploying something new, and in this case, will use extra caution due to concerns generated by the media and industry pundits regarding potential incompatibilities and security loopholes, and uncertainty about the benefits of migrating from their current OS to Vista. SMBs may be reluctant -- even as PC prices dip -- to invest in upgrading to new hardware necessary to run Vista.

The increasing use of software-as-a-service (SaaS) applications -- which require only a web browser -- is another factor that may have an impact. However, much will depend on Microsoft's marketing prowess and the support of the broader ecosystem of partners.

#8: Unified communications through VoIP appliances

AMI predicts that VoIP will begin a long transition from a market-driven attraction of all-in-one VoIP appliances that supports voice/unified messaging/security/mobility with provisions for remote management and desktop/server collaboration application integration. While the transition will not be complete in 2007, the die has been cast by Office 2007 and MS Exchange, which embed unified communications as a feature. Adoption of broadband VoIP applications such as Skype, Yahoo and Vonage will grow rapidly, especially among small SBs (one to four employees); hosted VoIP adoption will increase among the five to 20 employee segment as these solutions become more reliable, secure and scalable. Among MBs, there will also be steady growth in enterprise messaging applications such as IBM/Lotus Sametime and Exchange Instant Messaging services as these companies realize the benefits and convenience of real-time communications.

#9: Changing role for the channel

The IT channel continues to be in a state of flux, VARs (Value Added Resellers) and regional systems integrators struggle to adapt to the changing market demands and the evolving business models of IT vendors. While SMBs continue to spend a significant portion of their IT budgets with local and regional VARs, the nature and scope of what they purchase through these providers is changing. With hardware becoming a commodity purchase, and as manufacturers improve direct service and support capabilities, the percentage of direct hardware purchases through retail will continue to rise. Likewise, SMBs are also buying SaaS solutions directly from SaaS vendor putting pressure on VARs and SIs to provide other value-added services to SMBs.

Channel partners will need to invest in building integration and business consulting skills, and to maintain market advantage. In addition, they will need to partner with large manufacturers, such as IBM and HP, who are increasingly "productizing" many basic IT services, and providing partners with opportunities to resell these services and add value around them. Traditional VARs, DMRs and distributors need to re-examine their offerings and become service providers. AMI predicts that at least the VAR channel will transform itself to a "value-added provider" or VAP moniker, as providers incorporate more value-added integration and infrastructure managed services into their business models. The VAPs will also see a greater percentage of their business coming from the SMB segment.

#10: The battle for the Web-based OS takes shape

Salesforce.com (Apex and AppExchange) and Amazon (Amazon Web Services) have led the charge to build Web-based operating systems and ecosystems, providing developers and customers with access to their technology platforms, infrastructure, tools and knowledge base. As they do so, they are transforming the Internet from an ecosystem to a new computing platform. Unlike traditional operating systems, the Web-based operating system is comprised of a huge distributed computer network that many users can access virtually. Developers and start-ups will be the early adopters of these Web-based operating systems, using them, in many cases, as an easy, low-cost and dependable foundation on which to develop and deliver new solutions -- many of which are likely to be aimed at small business customers. Can Google, IBM and Microsoft be far behind in what may be the most important battle on the Internet? AMI expects these giants -- and others -- will weigh in and up the ante.

Bonus Prediction: The IT Generation Gap Materializes, Dramatically Changing the Way IT Decisions Are Made

As baby boomers retire and are replaced by younger Gen X workers and entrepreneurs, a significant IT generation gap will emerge and grow, especially in mature technology countries. Younger decision makers, reared on the Internet, video games, MySpace and iPods, will demand business applications that are as easy to use and as flexible as the consumer applications they've become accustomed to. This segment will expect a more "consumerized" business application shopping experience, in which it is easy to access, evaluate and purchase solutions. Younger decision-makers will also demand solutions with minimal training requirements, smaller IT footprints, automatic upgrades and fast ROI. In addition, they will expect their business solutions to enable community participation and allow for personalized, contextualized information access. This dynamic bodes well for vendors who are powering their solutions with next generation, Web 2.0 capabilities, and creating transparent sales, pricing and packaging strategies.

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