Top 10 SMB Technology Predictions for 2012 from the SMB Group

Last week  we published a report card on our last year’s top 10 market predictions for 2011.

Here are the SMB Group’s Top 10 SMB Technology Predictions for 2012! A more detailed description of each follows below.

  1. Economic Anxiety Lowers SMB Revenue Expectations and Tightens Tech Wallets
  2. The SMB Progressive Class Gains Ground
  3. The SMB Social Media Divide Grows
  4. Cloud Becomes the New Normal
  5. Mobile Application Use Extends Beyond Email to Business Applications
  6. Increased SMB Business Intelligence (BI) and Analytics Investments Are Sparked by the Social-Mobile-Cloud Triumvirate
  7. Managed Services Meet Mobile
  8. The Accidental Entrepreneur Spikes Demand for No-Employee Small Business Solutions
  9. Increased Adoption of Collaboration and Communication Services in Integrated Suites
  10. The IT Channel Continues to Shape-Shift

2012 Top 10 SMB Technology Market Predictions in Detail

  1. Economic Anxiety Lowers SMB Revenue Expectations and Tightens Tech Wallets. After the Great Recession officially ended in 2009, the U.S. economy resumed moderate economic growth in 2010—and the SMB outlook for 2011 became fairly bullish. But new economic worries and uncertainties are dampening some SMB outlook. Our 2011 SMB Routes to Market Studyindicated that SMBs are less confident about their revenue prospects for 2012: 56% of small and 63% of medium businesses are forecasting revenue growth for 2012, compared to the 77% of both small and medium businesses that forecasted growth for 2011. And many SMBs are tightening their tech wallets: More are forecasting flat or decreased IT spending for 2012 compared to 2011. To loosen the purse strings, tech vendors must deliver a rock-solid case for how their solutions help address top SMB challenges—which are to attract new customers, grow revenues and maintain profitability. In addition to broadening subscription-based cloud solution options (which offload big upfront investments), more vendors will offer flexible, alternative financing to help ease the financial burden—and gain a leg up on competitors.
  2. The SMB Progressive Class Gains Ground.That said, we also see a distinct category of SMBs that we are terming “Progressive SMBs.” Despite economic uncertainties, Progressive SMBs plan to increase IT spending. These SMBs see technology as a vital tool for business transformation, a mechanism to create market advantage and a way to level the playing field against bigger companies. Although price is still a key factor for Progressive SMBs, they are more likely to rate other factors—such as easier to customize for my business, strong reputation and brand, and ability to provide local service and support—higher than other SMBs when making technology decisions, according to our 2011 SMB Routes to Market Study. Progressive SMBs invest more in technology and see the results in terms of higher revenue expectations. For instance, 73% of medium businesses that are investing more in technology anticipate revenue increases in 2012, compared to just 17% among those decreasing IT spending. Technology vendors need to develop different marketing campaigns and more sophisticated solutions for Progressive SMBs than for their counterparts to win in this very important segment.
  3. The SMB Social Media Divide Grows. SMB use of social media is rising. According to our 2011 Impact of Social Business in Small and Medium Business Study, about 50% of SMBs already use social media, and another 25% plan to do so within the next 12 months. The study revealed that about half of SMBs take a strategic and structured approach with social media. These “strategically social” companies use social media for more activities, use more channels and are more satisfied with the business results than the other half of SMBs that are still throwing spaghetti on the Facebook wall. These more informal, ad hoc users say that they don’t have enough time to use social media effectively; they can’t decide what social media strategies and tools will work best; it’s too difficult to integrate social media with sales, marketing, service and other business processes; and they are unable to measure value from social media. As new social media tools—from crowd-sourced pricing to video commerce—take shape, SMB social media “haves” will gain business ground on the “have-nots” in an exponential manner. As the have-nots lose ground, they will clamor for better social media guidance and easier-to-use, better integrated and more affordable social media management solutions.
  4. Cloud Becomes the New Normal. Is the cloud perfect? No. Is it right for every solution and every business? No. But that said, the rate and pace of technological change are in overdrive, and the need for businesses to harness new technology-based solutions—social, mobile, analytics, etc.—to maintain a business edge is rising. Our 2011 SMB Routes to Market Studyresults reveal that demand for cloud-based solutions is accelerating in almost all solution areas. For instance, in the past 24 months, only 7% of small businesses purchased or upgraded cloud accounting/ERP solutions, compared with 13% that plan to purchase them in the next 12 months. Areas that show the biggest potential for cloud gains in 2012 are marketing automation, business intelligence/analytics, and desktop virtualization solutions and services. Most SMBs simply don’t have the staff, expertise or capital budgets needed for do-it-yourself IT—and they can’t afford the time it takes to get business payback from a solution that they need to vet, buy, install and deploy in-house. This makes the arguments for cloud computing—reduced capital costs, speed to deploy, and real-time collaboration and visibility—compelling. Demand for anytime, anywhere, any-device mobile access to applications will also accelerate cloud adoption, as many SMBs will want to offload management of mobile applications to a cloud solutions provider too. Enterprise players such as Oracle (with RightNow) and SAP (with SuccessFactors) have already begun their cloud shopping sprees. Look for traditional SMB vendors (Intuit, Microsoft, Sage, etc.) to join in the fun.
  5. Mobile Application Use Extends Beyond Email to Business Applications. In a custom study we completed this summer, SMBs indicated that they plan to significantly increase spending on mobile devices and services in the next 12 months, with the highest jump in the 5-to-49–employee size band. The study revealed that with mobile use of collaboration apps (email, calendar, etc.) now mainstream, SMBs are mobilizing business applications. Some of the strongest categories for SMB current and planned mobile app use are mobile payments (52%), time management (59%), field service (59%), and customer information management (69%). This rapid uptake will also include more vertical apps that are a perfect fit for industry-specific needs, especially given the choice of both smart phone and tablet (read: iPad) form factors. Unfortunately, our crystal ball is cloudy when it comes to predicting if another vendor will be able to give Apple a run for its money in the business-use tablet market.
  6. Increased SMB Business Intelligence (BI) and Analytics Investments Are Sparked by the Social-Mobile-Cloud Triumvirate.According to our 2011 SMB Routes to Market Study, 16% of small and 29% of medium businesses purchased/upgraded a BI solution within the past 24 months, and 16% and 28%, respectively, plan to do so in the next 12 months. The social-mobile-cloud triumvirate will fuel new and increased SMB investments in this area as businesses try to plow through the growing data avalanche to get to the insights they need to grow their businesses. As SMBs try to get a better handle on customers’ and prospects’ opinions and influence networks, interest in sentiment analysis and social graphing solutions will grow. New mobile access capabilities and applications from BI vendors designed to provide SMBs with just the information they need, when and where they need it, will spur interest as well. Finally, our study indicated that roughly a third of SMBs use or plan to use cloud-based BI and analytics solutions. An expanding array of cloud options in this area will make it easier and more affordable for more SMBs to deploy these solutions.
  7. Managed Services Meet Mobile.Despite momentum toward the cloud, it will continue to be a hybrid world for a very long time. Many SMBs will continue to use existing on-premises apps and choose on-premises deployment as security, regulatory or other needs dictate. So most SMBs will continue to grapple with IT infrastructure management—even as new mobile device management and governance challenges grow. SMB adoption of mobile phones and tablets is now on par with that of traditional landline phones, according to our 2011 SMB Collaboration and Communication Study. With employees more likely to lose a smart phone than a laptop, security issues abound and will only increase. The “bring your own device” (BYOD) phenomenon creates additional concerns, not least of which is to create a firewall between personal and business data. These SMB challenges provide ample opportunity for wireless carriers, networking vendors, MSPs and others that can provide integrated and automated managed services. These are likely to include services that encompass management of cloud-based infrastructure and all end-point devices, from desktop PCs, tablets and smart phones to purpose-built mobile devices; network services to reduce downtime and help optimize the network that mobile access relies on; and support for cloud-based dual-persona solutions on personal mobile devices.
  8. The Accidental Entrepreneur Spikes Demand for No-Employee Small Business Solutions.As unemployment has increased, so has the number of freelancers, contractors, independent consultants and others choosing to go it alone. According to the U.S. Census Bureau, small businesses without a payroll make up more than 70% of America’s 27 million companies, with annual sales of $887 billion. Many entrepreneurs never intended to take this path, but stay solo because they prefer it to going back to the corporate payroll. Others stick it out due to limited employment options. Either way, more accidental entrepreneurs view what they’re doing as a long-term business venture instead of a short-term stopgap. As a result, they see themselves more as business owners than as freelancers or contractors. But many have no intention or desire to hire employees. This will spike demand for—and growth of—applications and services that help them to achieve their business goals without adding employees. Traditional small business powerhouses (Intuit, Sage, etc.), pioneers in the SOHO space (FreshBooks, Shoebox, Zoho, etc.), new start-ups and others will increasingly cater to their needs with solutions that make it easier for them to fly solo—whether from a home office or on the go.
  9. Increased Adoption of Collaboration and Communication Services in Integrated Suites. As evidenced in our 2011 SMB Collaboration and Communication Study, the SMB pendulum is swinging from point solutions for voice, communications, social media and collaboration solutions to integrated suites. Medium businesses are leading the charge, with 28% currently using an integrated collaboration suite, and 35% planning to do so in the next 12 months. Small businesses are slower to make this leap, but a transition is under way here too. By moving from disparate point solutions to an integrated offering, SMBs can avoid the hassles of learning to use multiple user interfaces, going to different sites to login and remembering different passwords—in short, things that waste time and frustrate users. They also can lower costs and improve their ability to collaborate effectively. A growing roster of low-cost (or free), easy-to-use integrated collaboration suites (Google Apps, Microsoft Office 365, IBM LotusLive and HyperOffice, to name a few) are adding fuel to the convergence fire—although vendors will still need to address the obstacle of user resistance to learning something new.
  10. The IT Channel Continues to Shape-Shift. The trend triumvirate—cloud, social and mobile—is also reshaping the IT channel. These trends are moving the goal posts and changing the ways in which channel partners add value. Cloud computing reduces the need for hardware, software and infrastructure deployment skills, and ups the ante for educational guidance, business process transformation and integration skills. Re-imagined channel partner programs from vendors such as Intacct and IBM’s Software Group have blossomed as they shift partner rewards to focus more on value-add and renewals. Meanwhile, non-traditional IT partners, such as creative and marketing agencies, have stepped in to fill a gap by providing social media and digital marketing services for solutions such as Radian6 and HubSpot. In the mobile domain, partners will need to bring more value to help SMBs develop and implement mobile strategies, and offer solutions to manage mobile devices and applications and provide better network performance, reliability and redundancy. As with any significant inflection point, the cloud-social-mobile trend necessitates that older partner models continue to move aside as new, more relevant ones take shape.

For more information, please visit the SMB Groupweb site at http://www.smb-gr.com, contact us at (508)410-3562 or send an e-mail to information@smb-gr.com

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Report Card: 2011 Top 10 SMB Technology Market Predictions

–by Laurie McCabe and Sanjeev Aggarwal, SMB Group

 Before developing our 2012 predictions, we wanted to assess how we did on our Top 10 SMB Technology Predictions for 2011.  Here’s our take on how we did–let us know what grades you would have given us!

And stay tuned for our Top 10 SMB Technology Predictions for 2012 which we will post in a few days!

Note: On this grading scale, 5 means that we came closest to hitting the mark, and 1 means we missed it entirely.

Prediction Score  Comments
1. Mobile Commerce Lifts Off     5 Our 2010 Mobile Solutions Study revealed strong plans for mobile commerce, and a custom study we fielded in August put mobile commerce and payments at the top of SMBs’ mobile apps list. Most important, this investment is paying off:

  • EBay’s payments company PayPal reported a 552% increase in mobile payment volume for 2011 Cyber Monday over 2010 figures.
  • IBM reported mobile sales grew dramatically, reaching 6.6% of total e-commerce sales on Cyber Monday versus 2.3% in 2010.

In 2012, we see SMBs to building on this by integrating mobile commerce with financials and CRM solutions.

2. SMBs Demand that Vendors Bring Order to Social Media Chaos     3 Almost 50% of SMBs said that they use social media In our 2011 Social Business Study. But only about half use it strategically, and just  a small percentage use tools to manage social media. Although SMBs want to use social media more strategically, they face some big hurdles, including:

  • Not enough time to use social media effectively.
  • Can’t decide what social media strategies will work best.
  • Too difficult to integrate social media with sales, marketing, service and other business processes
  • Unable to accurately measure the value of social media.

While SMB demand is there, vendors have yet to fulfill it with effective, affordable and easy-to-use solutions.

3. App Stores Become a Key Information Source and Channel for SMBs        3 SMB use of app stores such as Salesforce AppExchange, Intuit Workplace and Google Marketplace grew from 23% in 2010 to 28% in 2011 in small business, and rose from 44% to 48% among medium businesses, according to our 2011 SMB Routes to Market Study(a refresh of 2010). But we also found that:

  • Only 6% of small businesses and 17% of medium businesses use app stores on a regular basis–which pales in comparison use of search engines, and falls far short of regular use of email newsletters; colleagues, friends and family; vendor web sites, and Facebook.

Apps stores hold promise to help SMBs sort through the maze of solutions available, but app stores need to do more to become a premier and potentially disruptive SMB information and purchase channel.

4. The Shift to Cloud Computing and Software-as-a-Service (SaaS) Becomes Irreversible      5 Economic necessity and technological complexity is driving more and more SMBs to the cloud. Comparing data from our 2010 and 2011 SMB Routes to Market Studies, we see:

  • Momentum is increasing for cloud-based solutions in almost all solution categories.
  • Among both small and medium businesses, use of cloud collaboration solutions was up 10% and adoption of cloud accounting/ERP was up 2%.

Is the cloud right for every solution? No. Is it right for every company? No. But the arguments for it–reduced capital costs, quicker to deploy, real-time visibility and collaboration among others–are increasingly making the cloud the option of choice for many SMBs.

5. A New Cloud Channel Model Forms       4 This transition is well underway and enabled by the growth of cloud computing, which relieves the channel of technical implementation.  We see:

  • The growing importance of non-traditional IT channels, such as creative and marketing agencies for vendors such as HubSpot and Radian6.
  • Re-imagined channel partner programs from vendors like Intacct, which offers partners more opportunity and collaborative goal setting and IBM’s Software Group, which rewards partners for value-add and renewals.

This transformation is still work in progress, and one we’ll be watching closely.

6. The Transition to the Insight Economy Gets a Bit Easier     3 The era of the zettabyte economy and big data is here. But the ease of dealing with it are mixed, according to our 2011 SMB Routes to Market Study:

  • 33% of medium businesses purchased/upgraded business intelligence solutions in past 24 months and 28% plan to purchase/upgrade in the next 12 months.
  • Mid-market specific BI offerings, such as IBM  Cognos Express and SAP Business Objects Edge, and more function-specific solutions from vendors such as Adaptive Planning and Host Analytics–are fueling adoption.
  • Uptake is slower in small business: 16% purchased/upgraded business intelligence solutions in past 24 months, and 16% plan to purchase/upgrade in the next 12 months.

Vendors are hitting the mark for medium businesses, but need more targeted solutions for small business to deliver “aha moments” for small companies.

7. Tablets Add Fuel to the Mobile Applications Explosion      5 Do we even need to back up for our score here?! We will anyway:In a custom study completed this summer, we found 50 percent of SMBs have deployed or plan to deploy tablets, such as iPads, within the next twelve months

  • SMBs indicated that they plan to significantly increase spending on mobile devices and services in the next 12 months, with the highest jump in the 5-49 employee size band.
  • Mobile use of collaboration apps (email, calendar, etc.) is mainstream, and SMBs show strong plans to add business applications including payroll, time management, field service and mobile commerce, among others.

This rapid uptake will continue as SMBs see more horizontal and industry-specific apps that are a perfect fit for the tablet form-factor. Now, the only question is whether another vendor will mount a serious challenge to the Apple iPad.

8. Better, Faster Integration Becomes a Key Business Solution Differentiator      4 SMBs understand that integration provides big business benefits, and they want solutions that streamline integration.

  • 23% of small and 28% of medium businesses indicated Integrating different applications as a top challenge, according to our 2011 SMB Routes to Market Study.
  • 64% of medium and 36% of small businesses use or plan to use an integrated collaboration suite, according to our 2011 SMB Collaboration Study.
  • 16% of SMBs have already integrated marketing applications with social media and 22% have plans to integrate them in the next 12 months, according to our 2011 Social Business Study.

Vendors are addressing this demand with pre-integrated solutions and suites, embedded integrators for typical integration scenarios and cloud-based integration services.

9. Hybrid Computing Requirements Accelerate Virtualization Adoption      4 Religious wars continue to rage about the “false cloud” and “cloud washing.” But many SMBs are more interested in the ends–subscription based pricing, offloading IT management and speed to solution benefit–than they are in the means. The 2011 SMB Routes to Market Studyreveals that:

  • 43% of medium and 16% of small businesses deployed/upgraded server virtualization solutions in the past 24 months while 31% of medium and 14% of small businesses plan to deploy/upgrade them in the next 12 months.
  • 32% of medium and 17% of small businesses deployed/upgraded desktop virtualization solutions while 29% of medium and 13% of small businesses plan to deploy/upgrade them in the next 12 months.
10. Continued Convergence of Unified Communication and Collaboration Suites     4 Vendors continue to consolidate more services into their offerings and SMBs are getting on board.

  • 64% of medium and 36% of small businesses use or plan to use an integrated collaboration suite, according to our 2011 SMB Collaboration Study.
  • 33% of small businesses are using VoIP (on-premise and hosted) solutions; 33% use Internet phone and video conferencing (e.g. Skype);  and 35% use web conferencing.  They also indicate strong plans to add more communications services: in the next 12 months: web conferencing (16%); voicemail to email (16%); fax-to-email (15%); and hosted VoIP (13%).
  • Medium businesses are further along the curve: 74% already use VoIP on-premise and hosted services; 66% use web conferencing; 55% use fax to email and web conferencing and 42% use Internet phone and video conferencing (e.g. Skype).  Plans are also strong to add web conferencing (16%); voicemail to email (16%); fax-to-email (16%); and hosted VoIP (13%).

Integrated services lower costs and a unified platform makes it easier for SMBs to get more value from their collaboration and communications solutions without the hassles of separate sign-ons and different user interfaces–which will continue to drive this trend in 2012.

If you’re interested in any of the above SMB market studies, we are offering special end-of-year discounts on these studies. Click here for more details.

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