SMB Group’s 2013 Top 10 SMB Technology Market Predictions

smbfinalHere are the SMB Group’s Top 10 SMB Technology Predictions for 2013! A more detailed description of each follows below.

1.    Progressive SMBs Sprint Ahead of Peers
2.    SMBs Prepare to Optimize for Mobile Computing
3.    Social Gets Serious
4.    Integration Becomes a Top Priority for Medium Businesses
5.    Information Overflow Drives Demand for Infrastructure and Data Protection Solutions
6.    The Channel Transforms for a New Technology Landscape
7.    Cloud Cover Expands
8.    The Big Gap in Big Data Grows for Small Businesses
9.    SMB Interest and Involvement in Big Company Supplier Networks Dials Up
10.  Successful SMB Vendors Sharpen the Segmentation Lens

(Use this link for a .pdf version: Top 10 SMB Technology Predictions for 2013)

2013 Top 10 SMB Technology Market Predictions in Detail

1.    Progressive SMBs Sprint Ahead of Peers. Last year we identified a distinct correlation between SMB investments in technology and their business performance. Progressive SMBs are more growth driven, invest more in technology and use technology for competitive advantage. They are also much more likely to anticipate revenue gains than peers whose tech investments are flat or declining—and the gap is widening. In 2011, 81% of SMBs that planned to spend more on technology forecast revenue growth for 2012, while only 45% of SMBs with flat IT budgets, and just 34% of those with decreased IT budgets expected their businesses to grow. Now, in our recently completed 2012 SMB Routes to Market Study, we see that 85% of SMBs that plan to invest more in technology anticipate revenue increases; only 42% of those planning to decrease IT spending expect revenues to rise, and 38% that planning for flat IT investments are anticipating growth. We expect this gap to continue to grow as more SMBs make the technology-business performance connection and see business benefit from it.

2.    SMBs Prepare to Optimize for Mobile Computing. Comparison of our 2010 and 2012 SMB Mobile Solutions studies shows SMB adoption of mobile solutions soaring over the past couple of years. SMB use of mobile business apps for employees rose from 17.5% to 21% from late 2010 to 2012, adoption of mobile-friendly websites ticked up from 18% to 34.5%, and mobile commerce adoption increased by 5%. But most SMBs haven’t yet figured out how to manage the explosion of devices, apps and the “bring your own device” (BYOD) phenomena. As mobile expenses skyrocket and business reliance on mobile increases, SMBs will become more strategic about their mobile investments. They will increasingly focus on mobile management and security, and on integrating mobile apps more effectively with other business workflows and applications. Vendors that can supply easy to deploy, cost-effective mobile device management, platforms and solutions to help them more efficiently manage and derive value from mobile will have a receptive audience.

3.    Social Gets Serious. The percentage of SMBs that use social in their businesses has jumped over the past year, from 53% in 2011 to 58% in 2012. But, our 2012 SMB Social Business Study reveals that only 28% of SMBs are using social strategically; the majority take an informal, ad hoc approach. In the early going, simply using social media—however experimentally—has been a way to differentiate. But the social bar is rising. To ensure that their increasingly time-intensive investment in social pays off, more SMBs will want to develop plans to map their social efforts to specific business objectives and outcomes. But, vendors will need to step up to help enable this, providing solutions and services that make it easier to coordinate, manage and integrate social activities in a more time-effective and cost-efficient way.

4.    Integration Becomes a Top Priority for Medium Businesses. A funny thing happened on the way to the cloud: integration has become a top priority for medium businesses. In fact, integration has moved up from #4 in 2011 to the #1 technology challenge in our 2012 SMB Routes to Market Study. Smaller businesses will need to reach a certain threshold of volume, pain and problems before they push integration higher up on the list, but medium businesses are grappling with integrating legacy on-premises apps with newer cloud apps, and integrating cloud apps with each other. At the same time, they are becoming painfully aware of the productivity drain, errors and lack of visibility those results from applications that “don’t talk to each other.” Although integration isn’t as sexy as social or mobile, integration medium businesses will invest to achieve productivity, time savings, error reduction and decision-making benefits that integration enables.  However, a complex, generic integration approach won’t cut it for small or medium businesses—they will look for pragmatic solutions that meet functional and industry-specific workflow integration needs, and simultaneously help address data quality requirements.

5.    Information Overflow Drives Demand for Infrastructure and Data Protection Solutions.  The mobile-social-cloud triumvirate is generating unprecedented amounts of data. In turn, businesses must protect this data from criminals, natural disaster, and just plain old human error. In our 2012 SMB Routes to Market Study, respondents rated “securing and protecting my company information from threats” as a top technology concern. As regulatory pressure and consumer scrutiny to safeguard data intensifies, SMBs investments for data backup, security, server virtualization and desktop virtualization solutions will rise. 55%, 50%, 34% and 36% of SMBs, respectively, plan to purchase and/or upgrade solutions in these areas in 2013.

6.    The Channel Transforms for a New Technology Landscape. The complexities of cloud, social and mobile technologies are transforming the IT landscape and the role of the channel. Today, SMBs are looking for more than products from the channel–they need partners that can both guide them and deliver round the clock service and support for a spectrum of areas–from virtualization to security to data protection to business applications. Our 2012 SMB Routes to Market Study indicates that SMBs want partners that understand their business, can recommend solutions, and provide cost-effective solutions. But they also demand technical competence, remote and on-site service and support, customization capabilities and 365x7x24 coverage from channel partners. To meet these elevated customer expectations, VARs and other traditional channel partners will need to invest in the infrastructure, expertise and processes necessary to transform their businesses to become managed service providers (MSPs). They will also need to participate in ecosystems that enable them to partner as necessary to fill in gaps in their own portfolio to provide their customers with more complete solutions.

7.    Cloud Cover Expands. Last year, we predicted that the cloud would be become the “new normal” for SMBs, who need to harness technology solutions for the business, but often lack the skills and staff for do-it-yourself IT. Indeed, our 2012 SMB Routes to Market Study shows that about 52% of SMBs are using cloud solutions in their businesses. The value proposition for cloud computing—reduced capital costs, speed to deploy, and real-time collaboration and visibility—are become more compelling, and adoption shows no signs of abating.  For the first time, we see plans for cloud overtaking plans for on-premises implementation in selected solutions areas, such as marketing automation. Demand for anytime, anywhere, any-device mobile access to applications, and more options for SMB-oriented server and desktop virtualization offerings, and infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) solutions will continue to accelerate this trend.

8.    The Big Gap in Big Data Grows for Small Businesses. The data fire hose is at full blast and shows little signs of abating. Meanwhile, there’s no question that companies that figure out how to harness and turn data into insights most effectively will gain huge competitive advantages. Our 2012 SMB Routes to Market Study shows that medium businesses are taking the steps needed to turn the information fire hose into actionable business insights, with 57% of medium businesses having purchased/upgraded a business intelligence/analytics solution in the past 24 months, and 49% planning to do so in the next 12 months. However, small businesses are hard-pressed to follow suit: just 18% of small businesses have purchased/upgraded a business intelligence/analytics solution in the past 24 months, and only 17% plan to do so in the next 12 months. To make big data relevant for small businesses, BI and analytics vendors will need to up education regarding relevant use cases and key performance indicators, and provide streamlined tools that integrate easily with the business applications small businesses already use.

9.    SMB Interest and Involvement in Big Company Supplier Networks Dials Up. Attracting new customers, growing revenues, and increasing profitability are perennial SMB challenges. SMBs are always looking for ways to grow the business, and many B2B SMBs covet the opportunity to get their share of the $300 billion dollars that large businesses spend annually on goods and services. Recognizing that SMBs are the engines of economic growth, large businesses are developing new pathways for SMBs to compete for this business. For instance, IBM and 15 other large companies have created Supplier Connection, a free portal where SMBs can register their companies to gain visibility and consideration from procurement communities of large corporations. And, as a by-product of SAP’s Ariba acquisition, every SAP customer (including almost 35,000 Business One customers, who are predominately small businesses with fewer than 100 employees) gets a free connection into the Ariba network. Over time, these networks may also help SMBs with global aspirations start doing business in new regions.

10.    Successful SMB Vendors Sharpen the Segmentation Lens. The SMB market has never been homogenous, but instead is a myriad of different market segments. At a high level, there are three broad SMB segments that differentiate technology adoption behavior. Progressive SMBs, as we noted above, invest in technology to fuel business growth. Meanwhile, SMB Conservatives are less growth oriented and more lifestyle driven, have few internal IT resources, and buy tend to invest in IT only when they have to. Moderates, of course, are in the middle. But effective segmentation doesn’t end there–and a vanilla marketing and solution approach is likely to fail for all but the most generic offerings. Vendors must analyze how various dimensions, including industry, phase of business, age of decision-makers, age of business and others affect technology decision-making, budgeting process, channel preference and the types of solutions they adopt. Fine-tuning solutions, marketing and channels for distinct segment requirements will give vendors an edge as they compete in an increasingly crowded and noisy market.

BI and Analytics for Mid-Market Businesses: My Podcast with SAP

I recently joined Paul Clark from SAP in a thought leadership podcast to discuss the topics of Business Intelligence (BI), Enterprise Performance Management (EPM), and Social Analytics for Mid-market companies.

In the podcast, we discuss the various aspects and uses of Enterprise Performance Management (EPM), Business Intelligence (BI), and Social Analytical tools within the dynamics of a mid-market business. We talk about how the proper use of EPM and BI tools and software by companies in the mid-market can achieve a higher level of corporate consistency and efficiency in performance management.
Our conversation also turned to a newer area of business intelligence–Social Analytics. Social Analytics tools monitor and analyze market and brand sentiment and the return on social engagement with consumers. They can help mid-market companies monitor and engage with customers in the areas of support, sales and ongoing relationship development.

We offer some final advice on the “first steps” towards achieving an improved level of performance management within the mid-market corporation.

I hope you enjoy the podcast!

Podcast Segments and Timeline:

00:00 – 01:10: Introductions and backgrounds

01:10 – 16:50: Enterprise Performance Management and Business Intelligence. Here’s what we covered:

  • Defining Enterprise Performance Management (EPM) and Business Intelligence (BI) and the role it can play in helping mid-market(*) companies and where
  • The rate of adoption of performance management practices and business intelligence in mid-market organizations
  • Key issues facing mid-market leadership teams when it comes to enterprise wide performance management practices
  • Some guidance for mid-market company leaders with respect to improving corporate performance and long-term success
  • What results are mid-market companies seeing from EPM and Business Intelligence solutions?

16:50 – 30:00: Social Analytics. What we covered:

  • Defining Social Analytics and the role it can play in helping mid-market companies and where
  • Whether mid-market companies are becoming interested in monitoring social networks and social media. If so, what they plan to do with this information and insight
  • Whether the data from social networks is an opportunity for mid-market companies
  • Final advice for CFO’s first steps to improve corporate performance management.

Thanks to Paul Clark and Chris Herbert (discussion moderator) for participating in this conversation. Below are their bios.

Paul Clark

Paul Clark is responsible for the messaging and deliverables that describe the business analytics solutions from SAP, from business intelligence and enterprise information management to enterprise performance management and governance, risk, and compliance. Paul has over 20 years’ experience in marketing, specializing in product and solution marketing. He holds a BSc from the University of Bristol, UK and a Management DESS from the Université de Savoie, France.

Chris Herbert

Chris Herbert is the manager of the CFO Intellectual Exchange Network which brings thought leaders together to share experiences and engage in conversations around the office of finance and the role technology is playing to improve business performance, compliance and overall success.

IBM Global Financing Antes Up Another $4 Billion to Fuel SMB and Business Partner Growth

IBM Global Financing (IGF) recently announced that it would make an additional $4 billion available to help SMBs finance technology purchases through IBM’s partner channel. While this sounds like a very large amount of money (and it is), consider that in less than one year, 7,000 SMBs took advantage of the $1 billion in financing that IGF offered up in late 2011 . In fact, IBM had underestimated pent-up demand—IBM had expected the $1 billion to last 18 months.

IGF is quadrupling its initial commitment to help SMBs finance new cloud, analytics, mobile and infrastructure technologies to help grow their businesses. The program also makes it easier for IBM business partners—including managed service providers (MSPs), who are often SMBs themselves–finance the infrastructure investment they need to build the hosting environments they need to serve customers.

Some of the details include:

  • Deal minimums start at $5,000 U.S., and the maximum tops out at $500,000, with a 0% payment plan for 12 months, making the program relevant for both small and medium businesses.
  • Typical financing contracts last 3 years, but no specific time frame is mandated.
  • IBM business partners sell the financing. These business partners can size the solution and financing required to individual customer requirements, and execute the contract via IBM’s Rapid Online Financing widget, which is designed for non-financing experts.
  • Credit-qualified SMBs can get an approval in just a few minutes.
  • Financing options range from simple loans to tailored leases to total solutions including hardware, software and services (both IBM and non-IBM) in one contract with one predictable monthly payment.
  • IBM is rolling out the program on a worldwide basis.

In addition, IBM has created a new mobile app to further streamline the process. Business partners can quickly provide their clients with price proposals and generate credit approvals using an iPad, iPhone or Android mobile device.

Access to Capital–the Fuel for Progressive SMBs

As discussed in The Technology—Performance Connection for Midmarket Businesses, technology has become a critical lynchpin for business success. Businesses of all sizes increasingly view technology as an essential to improving customer engagement, raising employee productivity, and creating innovation and differentiation—all necessary to building economic value.

SMB Group research reveals a distinct correlation between SMB investments in technology and their business performance. “Progressive SMBs,” who invest more in technology much more likely to anticipate revenue gains than peers whose tech investments are flat or declining. For instance, our recently completed 2012 SMB Routes to Market Study shows that while 85% of SMBs that plan to invest more in technology anticipate revenue increases in 2013, only 42% of those planning to decrease IT spending expect revenues to rise, and 38% that planning for flat IT investments are anticipating growth.

Figure 1: IT Spending Current and Planned

SMB Progressive growth

Source: 2012 and 2011 Small and Medium Business Routes to Market Study, SMB Group

Meanwhile, as more SMBs come to view technology as key enabler to create market advantage, level the playing field against bigger companies, and adapt to new business and market requirements, the percentage of SMBs that are planning to increase IT spending is growing, as shown in trending analysis of 2011 and 2012 SMB Routes to Market Studies (Figure 1).

However, access to capital remains tight, and many SMBs find it challenging to get the capital required for the technology investments they need to grow their businesses.A July 2012 survey by the National Small Business Association (NSBA) found that 43 percent that needed funds for their businesses over the past four years were unable to find a lender. As important, 53 percent said they’d been unable to grow their business or expand operations due to a lack of capital—and almost one-third had to lay off workers.

A Virtuous Cycle for IBM, SMBs and MSPs

IBM isn’t a charity or governmental agency. As a for-profit organization, one of IBM’s key goals for the program is to fuel sales of IBM products, including PureSystems, which offers a new, integrated platform to tune hardware and software resources for data intensive workloads, and gain more flexibility to configure applications for either an on-premise or hosted environments, and a multitude of infrastructure, cloud, mobile and business intelligence solutions. If past success is an indicator of future performance, IBM will certainly achieve this goal with its new round of financing.

Furthermore, this fresh pool of financing should helps MSPs to build scalable infrastructure and hosting environments, and provide more innovative and differentiated offerings to SMB customers. As I discussed in MSP Cloud Challenges in the Midmarket–and How IBM Helps Meet Them, top MSP challenges are to: procure and deploy the resources they need to scale and grow; stay ahead of the technology curve, and to provide the end-to-end services their customers want.  Since IBM financing will cover both IBM and non-IBM content in one contract, it will make it easier for MSPs to build out a more comprehensive, end-to-end infrastructure.

The result? IBM can attract new MSP and other partners, and get them outfitted with the solutions they need more quickly. The net-net is that MSPs and other IBM business partners will be able to speed up and scale their ability provide new solutions that SMBs need for business growth and agility, and help SMBs finance this investment.

Finally, IBM isn’t just throwing money (albeit a large amount) at the situation. The new round of financing is additive to several new global initiatives for MSPs, which IBM launched in September. IBM has put together an integrated program that provides the money, expertise and solutions that both MSPs and their Progressive SMB customers require.

This is the fifth and final post in a five-part blog series by SMB Group that examines the evolution of midmarket business technology solutions and IBM’s Managed Service Provider Channel programs.