InformationWeek Stories by Steve Hilton

InformationWeek Stories by Steve Hiltonhttp://www.informationweek.comInformationWeeken-usCopyright 2012, UBM LLC.2011-02-07T08:00:00ZTop 3 Technology Trends For SMBs In 2011Mobile, cloud, and the channel are where SMBs will see growth and a return to familiarity according to Steve Hilton of Analysys Mason.http://www.informationweek.com/news/229201235?cid=SBX_iwk_related_mostpopular_Services_smbTwo years of economic woes have left many small and midsize businesses (SMBs) lean and hungry. They still face some key business constraints that hinder their chances of growth, but in some parts of the world we are starting to see the end of a difficult economic period. The economic recovery in the U.S. has certainly lagged that of Europe and Asia, but looks like the U.S. economic lion is starting to get its roar back. It is time for us to make new predictions for technology trends in 2011. Here are our three predictions for SMBs in 2011. Trend 1: Mobile Applications One of the top trends for consumers has been the proliferation of mobile applications. There are plenty of interesting applications that are appropriate and useful for SMBs, but no vendor or service has substantively started capitalizing on the value of mobile applications in an applications store environment for SMBs. Analysys Mason expects mobile communication service providers will create packages of mobile applications for SMBs. Sprint is dabbling with this concept right now with its Sprint ID Business Pro Pack. Communications service providers (CSPs) will pre-test these applications -- with plenty of help from handset vendors -- in order to make sure they function properly on approved Android, Apple, RIM and Symbian devices. There are many categories of SMB employees -- for example, sales people, technology support, customer services, executives, etc. -- so we anticipate that CSPs will categorize SMB end users into different segments and match those segments to appropriate mobile application packages. We expect CSPs to trial only one or two of these free application packages initially, although we anticipate that CSPs will charge for more advanced packages in the future. Kudos for Sprint for getting out in front of the market. Trend 2: Cloud-Based Services SMBs still need to cut costs and one way to accomplish this task is with cloud-based services. SMBs have underinvested in technology for the last two to three years. They must replace some of their oldest technology or face increasing maintenance costs and the possibility that their systems could break down. SMBs could purchase new on-premises solutions, but shortages of free cash flow are quite common. Furthermore, while interest rates remain low, banks are loath to extend credit to SMBs in almost all countries. SMBs will continue to favor cloud-based email, messaging, and collaboration solutions like those from Comcast in the United States. We expect CSPs to offer more cloud-based storage and back-up solutions as well as begin to dabble in SaaS solutions like CRM. Trend 3: Novel New Sales Channels Launched Most technology vendors and service providers that target large enterprises have technology centers and R&D facilities. Vendors and service providers often bring representatives of large enterprises to visit these centers to see the latest technologies in 'real-life' situations. Often these solutions are multi-vendor and really highlight the product and services prowess of the supplier. We believe a small number of CSPs (possibly only one) will set up a technology center aimed at SMBs, featuring multi-vendor solutions from the mobile and fixed-line telecom industries as well as unified communications, video and cloud services. Obviously, this type of technology center will need to be properly scaled and staffed for the SMB market with particular emphasis on the local needs of SMBs. The CSP will launch the technology center in one of their retail stores or possibly in a third-party retailer of consumer electronics products. Analysys Mason expects that 2011 will be a year of growth for small businesses and a year of increased SMB sales opportunities for the service provider, vendor, and partner community. While the economic recovery has been slower in the US than we've seen in Asia and Europe, we anticipate increased spending in a variety of technology areas. SEE ALSO: <a href="http://www.informationweek.com/news/smb/services/showArticle.jhtml?articleID=225702638">Service Providers Should Seize Cloud Opportunity Now</a> <a href="http://www.informationweek.com/news/smb/network/showArticle.jhtml?articleID=224201862">Cable Operators Smart Bet In SMB Market</a> <a href="http://www.informationweek.com/news/smb/network/showArticle.jhtml?articleID=224201862">Small Businesses Get Busy With The FCC Broadband Plan</a> <a href="http://www.informationweek.com/news/smb/network/showArticle.jhtml?articleID=224000120">HP-3Com Vs. Cisco: Who Will Be Your Network Provider?</a> <a href="http://www.analysysmason.com/About-Us/Our-people/Analysts/Steve-Hilton/">Steve Hilton</a> is lead analyst for Analysys Mason's Enterprise program, which explores the needs of the enterprise, small enterprise, and SOHO ecosystems.2010-07-08T07:00:00ZService Providers Should Seize Cloud Opportunity NowThe global market for enterprise cloud services is projected to almost triple by 2015, with the biggest growth coming in 2011, according to an Analysys Mason forecast.http://www.informationweek.com/news/225702638?cid=SBX_iwk_related_mostpopular_Services_smbThe global market for enterprise cloud-based services will grow from $12.1 billion in 2010 to $35.6 billion in 2015 (see Figure 1). The year-on-year growth rate will be 43% in 2011, but will decrease to 13% over the next five years. Software-as-a-service (SaaS) will account for 70% of revenue in 2010, while 30% will be related to infrastructure-as-a-service (IaaS). This revenue split will change over the next five years, as IaaS's share increases to 40%. <a href="http://www.informationweek.com/smb/services""><img src="http://twimgs.com/informationweek/1280/AnalysysMason_Fig1.jpg" width="440" height="293" alt="Enterprise cloud-based service revenue by sales channel, worldwide, 2015 [Source: Analysys Mason, 2010]" /></a> Figure 1: Enterprise cloud-based service revenue by sales channel, worldwide, 2015 [Source: Analysys Mason, 2010] Analysys Mason's forecast, created as part of the Enterprise program, covers software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS). It provides a five-year forecast of cloud services revenue worldwide, split into four business-size segments, four channels to market and eight geographical regions (see Figure 2). <a href="http://www.informationweek.com/smb/services""><img src="http://twimgs.com/informationweek/1280/AnalysysMason_Fig2.jpg" width="400" height="400" alt="Sub-categories in Analysys Mason's enterprise cloud services forecast [Source: Analysys Mason, 2010]" /></a> Figure 2: Sub-categories in Analysys Mason's enterprise cloud services forecast [Source: Analysys Mason, 2010]By 2015, registered IT and application partners -- such as one-tier agents, two-tier agents, system integrators (SIs), dealers and direct market resellers (DMRs) -- will account for 39% of end-user-generated revenue in this market. IT and application vendors will generate 36% of the revenue, either through web-based sales or dedicated account representatives. Fixed and mobile telecoms operators, and cable TV operators, will take a 23% share, and managed service providers (MSPs) will account for the remaining 2% of enterprise cloud-based services revenue. IT and application partners have a great opportunity, but ties to their legacy businesses could derail their aspirations in the cloud services market. Failure to access the potential of these services will doom these partners to stagnant or declining revenue streams over the next five to seven years. Recent equity analyst reports cite risks as a result of SIs' unwillingness to deal with cloud opportunities and threats. Service providers must embrace cloud services and bundle them into their enterprise and small or medium-sized enterprise (SME) solutions. The business model behind cloud services is similar to the business model behind established communications network services. A service provider amortizes its upfront data-center-related capital investment over a period of months and years, coinciding with the monthly fees charged to end-user enterprises for the use of the infrastructure. For a service provider, this model of business should be very comfortable. Less comfortable is the unregulated nature of the business - there is no guaranteed return on investment - and the non-telecoms-centric services they will be required to market and sell. Large enterprises will continue to adopt incremental pieces of cloud services to complement existing on-premises solutions. One of the benefits of cloud services is the ability to trial the solution with minimal up-front investment. This lowers the barriers to entry and gives enterprises new technology options. SMEs have been the beneficiary of some high-quality cloud services from NetSuite and salesforce.com for a few years. Cloud services have several attributes that make them strong additions to SMEs' technology landscapes, including: <ul> <li>minimal upfront costs</li> <li>minimal implementation and IT support requirements</li> <li>the removal of networked applications environments</li> <li>simple user interfaces</li> <li>scalable solutions.</li> </ul> As a result, SMEs will account for about 40% of cloud services revenue worldwide, and about 65% of the employees that use such services. While we believe that cloud services have high potential - we forecast that revenue will treble over a five-year period - we do not believe that enterprises will retire vast quantities of legacy solutions just so they can 'go cloud'. Instead, they will pick and choose cloud solutions for incremental technology projects. SMEs will be more likely candidates for mass migration to cloud services, although CSPs and vendors often do a poor job of crafting solutions that are appropriate for SMEs at a reasonable price. Analysys Mason's Enterprise program will continue to research cloud services this year. This research will include a series of reports and viewpoint articles on particular applications, infrastructure solutions, vendor and CSP successes and failures, and cloud scorecards for review by our clients and the SME market in general. <a href="http://www.analysysmason.com/About-Us/Our-people/Analysts/Steve-Hilton/">Steve Hilton</a> is the lead analyst for Analysys Mason's Enterprise program, which explores the needs of the enterprise, small enterprise, and SOHO ecosystems.