8. SMBs tap into social networking ‘Scene’ to grow and connect their businesses

As social networking continues its rapid global expansion, market forecasts indicate a growing share of SMB advertising and promotion investments, most notably in mature markets, moving their way onto social networking sites. Nearly double-digit growths in such investments are expected to be realized in mature markets like the United States, United Kingdom and Germany. In addition to marketing investments, SMBs are increasingly turning to social networking sites, such as LinkedIn and MySpace, to connect with other businesses and as a resource for real-time business intelligence, contact/lead generations as well as a medium for improving customer relationships. Vendors are also anticipated to leverage this trend by developing additional applications for greater interactivity, and as a means to gather enhanced intelligence on select content while targeting audiences.

9. Vendors blur the line between ‘Business Software’ and ‘Business Services’

The distinctions between software solutions and business process outsourcing will increasingly blur as software vendors—particularly in the SaaS realm—and business process outsourcing vendors focus more on delivering integrated applications, business process and managed services to SMB customers. For example, ADP is using recent acquisition of SaaS vendors Employease and Virtual Edge to automate and extend its business services footprint; Intuit’s acquisition of Digital Insights will enable its banking partners to provide a seamless and extended set of financial solutions to customers; Bank of America private labels and resells PayCycle’s on demand payroll services as part of its Integrated Small Business Online Banking Offerings; and numerous banks, publishers and direct marketers, including Amway, integrate their own business services with Smart Online’s OneBiz platform and business solutions to give their customers more comprehensive, turnkey solutions. This trend promises to give SMBs more complete solutions—and the best of both worlds. In contrast to a traditional BPO approach, customers retain solution visibility and control. At the same time, customers benefit from an ongoing, services-centric relationship with vendors.

10. Vendors stay in the black by Marketing ‘Green’, finding traction in ‘Server and Desktop Virtualization’ amid rising SMB demand

With businesses globally looking to boost both their public image and profit margins in the face of rising market competition, cost-based expense management will become the pre-eminent business response. This plays well for the cost reducing implications of several green technologies hitting the market, and highlights a larger market trend for increased energy efficiency in addition to added functionality. Virtualization’s appeal as a ‘green’ technology lies in its ability to dramatically improve SMBs’ computing resource utilization and performance, reduce infrastructure costs, consolidate physical space, provide an easier and more flexible application deployment mechanism, speed server and application provisioning times, and enhance reliability and uptime by providing organizations with inherent business continuity and disaster recovery functionality. New virtualization solutions from companies like VMware, Microsoft, and Citrix will allow companies of all sizes to take advantage of server and desktop virtualization

11. Manufacturer/Vendor financing programs defrost SMB tech budgets

As traditional lenders seek to tighten their balance sheets in 2008, an opportunity is rapidly emerging for cash-heavy technology manufacturers and vendors to inject fresh liquidity into IT lending markets by removing lending middlemen and directly offering competitive financing terms on products and services. Such strategies could be applied globally to incubate mature markets, and provide much needed purchasing liquidity to emerging markets as they continue to rapidly expand their IT footprint. Note that Asia-Pacific banks are increasingly being motivated to provide IT financing for SMBs, proving to be a useful means to reach out to the lower tier cities given the banks’ reach. In terms of forecasted demand for such financing from the borrower perspective, this trend is supported with increasing demand for such manufacturer/vendor supplied financing as seen with roughly 16% of SMBs in mature markets, and an even higher percentage in emerging markets, stating that they ‘often’ look for such financing options when making their IT investments.

12. SaaS will become a mainstream SMB alternative

SaaS isn’t quite a staple for SMBs, but adoption is ramping up. For instance, in 2004, 10 percent of U.S. small businesses, and 15 percent of medium businesses used SaaS; in 2007, use jumped to 21 percent of small and 30% of medium businesses. Pivotal shifts underway will further propel SaaS into the SMB mainstream. First, the growing reality of the “always-on” network helps even small companies that lack servers to take advantage of business solutions. Second, vendors such as ADP and Taleo are combining the benefits of SaaS solutions with business-process services to give SMBs more complete solutions. Third, large, established vendors such as Microsoft, SAP, Google are now in the game, underscoring SaaS viability, and developing ecosystems that will streamline and integrate the SaaS shopping, buying and use experience. As broader adoption of SaaS models become a reality, SaaS vendors will kick partnerships with VARs, retailers, and telcos, as well as financial institutions, direct marketers, business service outsourcers, and other non-traditional IT channels into high gear. In 2008, many of these channel partners will adopt platforms and partner with vendors that enable them to dispense a portfolio of services that SMBs can mix, match and integrate. Although SaaS adoption will accelerate much more rapidly in mature technology markets with pervasive high-speed connectivity, telcos that can assure quality of service and persistent connectivity will provide an on-ramp in emerging markets.