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2007: SMBs to go big on IT

Analyst house predicts rising IT spending but a slow start for Microsoft's new operating system.
Written by Farihan Bahrin, Contributor

IT will be on the business agenda for many small and midsize businesses (SMBs) in 2007, but budgets look set to fall in line with business requirements like greater security and mobility, says AMI-Partners' latest report.

Among AMI's predictions for 2007: adoption of IP-based communications will gain momentum, while Windows Vista can expect a cool reception from SMBs.

Released by AMI-Partners Wednesday, the report lists 10 global SMB IT trends to watch.

• SMB spending to surpass large business IT spending in 2007
The worldwide IT spending by SMBs will grow by 10 percent in 2007, fueled by continued high double-digit growth in countries in the Big Four category, consisting of Brazil, Russia, India and China. In contrast, SMB IT spending in Japan and North America is poised to surpass spending by large businesses in 2007--a trend that has occurred in Asia-Pacific, Europe and Latin America, said AMI.

• Storage and security convergence will help SMBs move up the adoption curve
Storage and security spending will grow by 19 percent in 2007, with storage optimization and end-to-end security a top priority among mid-market businesses. In addition to all-in-one (AIO) network storage appliances, SMBs will also spend on advanced security solutions, such as intrusion detection, secure identity and access management, Web filtering, encryption, and automated patch management.

• Software-as-a-service (SaaS) vendors start a new chapter
SaaS vendors will be actively targeting the SMB segment as investments in SaaS is projected to grow by 19 percent over the next five years. SaaS vendors will increasingly focus providing customers with blueprints for business process improvement, pre-built integration products, more varied and flexible pricing options, and ecosystems that facilitate community relationships.

Powerhouses such as Microsoft, Google, IBM and Salesforce.com will battle it out, while new SaaS players emerge, and the likelihood of any one player or ecosystem dominating the landscape will be slim to none, said AMI.

• Managed services to help SMBs manage more with less
More SMBs in mature technology markets are expected to offload cumbersome IT chores to outside experts so they can focus on their core business. This will lead to vendors offering companies more inclusive IT-based managed services packages. Big names such as HP and IBM will try to capitalize on this demand by tailoring their managed services portfolios--new infrastructure, storage, security and other offerings--to meet SMB solution, packaging and pricing requirements.

Telecom and cable companies will also launch programs to position themselves as key suppliers of managed infrastructure, managed security solutions and Web-based services to SMBs in the sub-20 employee segment.

• Outsourcing revisited
IT outsourcing will get a boost as the traditional IT services market continue to see double-digit growth in 2007 among global SMBs. Vendors in developing countries like India, China, Philippines, and Russia are expected to reap the benefits as mid-market IT outsourcing gains momentum.

In addition, with SMBs continually looking for ways to streamline their business processes and lessen the burden of regulatory/compliance concerns, IT vendors will create micro-vertical offerings for SMBs, catering to their specific business processes with "embedded IT".

• SMBs to go mobile
Wireless projects taking place in major cities around the world will lead to ubiquitous mobility as workers begin to tap on free or low-cost Internet access. Global SMB notebook shipments will grow by 20 percent in 2007 over 2006, outpacing desktop PC growth by five times. AMI is expecting global smartphone shipments to grow by 18 percent and the use of public wireless Internet to increase by over 30 percent.

• SMBs to adopt wait-and-see attitude on Windows Vista
With media reports of potential incompatibilities and security loopholes, SMBs may be reluctant to invest in Microsoft's latest operating system, especially since it may involve purchasing new hardware. Increased use of browser-based software-as-a-service (SaaS) applications is another factor that will likely deter SMBs from migrating to Vista, said AMI.

The good news for Microsoft is that there is a pent-up demand for PC replacements and some 40 percent of SMBs that own PCs are looking to standardize their operating systems, which could help Vista sales.

• Unified communications to gain traction
All-in-one Voice over IP (VoIP) appliances that support voice and unified messaging, as well as remote management and desktop collaboration integration, will debut in 2007. Adoption of broadband VoIP applications such as Skype, Yahoo and Vonage will grow rapidly, especially among small businesses, while more medium-sized businesses are expected to migrate to enterprise messaging applications such as IBM/Lotus Sametime and Exchange Instant Messaging.

Hosted VoIP adoption, meanwhile, will increase among the 5-20 employee segment as these solutions become more reliable, secure and scalable. 2007 will also see the debut of integrated unified communications appliances that integrate voice, data and video for the small-businesss segment.

• The changing role of resellers
SMBs will spend a significant portion of their IT budgets with local and regional Value-Added Rsellers (VARs) as the percentage of direct hardware purchases through the retail channel continues to rise. This will be partly due to hardware becoming a commodity purchase, and manufacturers improving their direct service and support capabilities. In addition, the VAR channel will transform itself to a "value-added provider" (VAP)--traditional resellers will evolve into service providers as they incorporate more value-added integration and infrastructure managed services into their business models.

• Battle for the Web-based operating system takes shape
Web-based operating systems that run on distributed computer networks will give developers an easy, low-cost and dependable foundation on which to develop and deliver new applications--many of which are likely to be aimed at small businesses. In 2006, companies like Salesforce.com and Amazon led the charge in promoting these Web-based platforms by providing developers and customers with access to their technology platforms, infrastructure, tools and knowledge base. This year, other industry giants like Google, IBM and Microsoft will be upping the ante with their own solutions.










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