Small businesses face tightening IT budgets this year, but here are five technology trends all midmarket companies should be keeping an eye on.
With IT budgets expected to be tight this year, small business owners must make wise investments in order to stay competitive. While most analysts believe some cutting-edge trends, like mobile advertising, are still half a decade away from offering immediate ROI to small and medium-size businesses (SMBs), technologies such as virtualization and the burgeoning proliferation of portable, Internet-connected devices can be well suited for midmarket companies.
1. Cloud Computing
Put simply, cloud computing is a way for SMBs to access enterprise-class technology with minimal up-front costs and easy scalability. Over the next three years, we’ll see cloud computing continue to expand. Because cloud computing allows a large number of networked computer systems to share an IT infrastructure, operating “in the cloud” frees small business owners previously limited by the capabilities of local or remote computers. It also allows midmarket companies to reduce in-house IT infrastructure costs and transfer day-to-day business applications to the cloud from their terrestrial offices.
Cloud computing is particularly attractive to SMBs because it allows them to reduce up-front investment in technology infrastructure and use Web-hosted services as they would electricity or water—paying only for what they use. But John Sloan, a senior research analyst at Info-Tech Research Group who likened the cloud computing market to a “gold rush,” said SMBs need to understand some of the unresolved issues around cloud computing.
“The attraction of cloud computing options right now is very similar to the attraction [of] distributed processing. It offers opportunities to do things with a far lower threshold of investment than what was traditionally thought possible,” Sloan said. “In the same way the SMBs led distributed processing in the ’90s, I think that the opportunity is there for a company like Zoho to show the benefit of lowering that threshold.”
Virtualization has been widely touted as a major cost-saving technology that reduces infrastructure costs and streamlines IT management. In essence, virtualization lets you transform hardware into software. Virtualization essentially lets one computer do the job of multiple computers, by sharing the resources of a single computer across multiple environments. Virtual servers and virtual desktops let you host multiple operating systems and multiple applications locally and in remote locations, which frees your from physical and geographical limitations.
Additionally, you will save money on energy costs and reduce expense on hardware resources. Building a virtual infrastructure can often result in a higher availability of resources, better desktop management, increased security and improved disaster recovery processes. Vendors such as VMware and DataCore have recently offered virtualization packages aimed at the SMB market, as has chipmaker IBM. DataCore President and CEO George Teixeira said the software is a “renewable resource” within SMBs that will provide years of return on investment.
3. Notebook/Netbook Adoption
This year, for the first time ever, notebook sales outpaced desktop sales. The attractiveness of notebooks and their smaller, less powerful cousins, netbooks, has grown as features such as battery life and structural durability has improved. Notebooks in particular are being regarded more than ever as replacements for desktop machines, holding enough memory and processing power to function just as well on the road as in the office.
Netbooks, on the other hand, should be treated more like large smartphones than small notebooks. They often lack the computing power that makes running multiple applications possible without delay or disruption, and forget about video conferencing. Before purchasing a netbook, decide if that’s the best machine to improve company efficiency, and not just lower IT costs.
It’s important to remember the limitations notebooks have as well. When notebooks aren’t being toted around through airports and conferences, they often require peripherals like a full keyboard, larger monitor and a mouse for use in the office.
Another issue to keep in mind before purchasing a slew of notebooks is that they are frequently lost and can be easily damaged. Anyone who ever had their notebook ripped out from under their fingers by the harried Starbucks customer/stubborn power cord combo knows this.
4. Open Source Software
Real investment in open source software is still off the radar of many SMBs, and that’s a pity, because cost-conscious midmarket companies can look to open source as an easy way to reduce IT costs: There are no licensing or upgrade costs, not to mention no initial software purchase.
Companies can save money by switching their CRM platforms to SugarCRM, a Linux-based CRM application, from Salesforce.com. Even running a supported version of the software, which means paying support costs, is far less than the forced upgrades and licensing issues that can crop up with a vendor lock-in.
While open source certainly hasn’t become a dominant force in the midmarket space, as more SMBs adopt open source technologies for non-critical applications, it is likely others, particularly tech-savvy small business owners, will realize the cost benefit potential of open source technology.
5. Online Social Networking
Are you LinkedIn? Have you been Facebooked? What’s going on with your Twitter account? How’s your MySpace page looking? OK, feel free to disregard that last question, but all kidding aside; social networking has the potential to level the playing field for SMBs in a big way. Why? It’s free.
The difficulty in transferring exposure on social media sites such as Facebook or in the blogosphere into business success should not be underestimated. Establishing an online audience takes time, patience and above all, dedication. One thing it doesn’t require is money. What you first need to understand is what you want social media to do for your company. Create a dedicated road map that spells out what your goals are. Your business may connect better with certain social media audiences and platforms than others.
Another helpful hint: Ask your younger employees about what social networking trends they respond to, and which ones turn them off. While your audience may not be in that age group, younger generations are well accustomed to online social networks, and are hip to the disingenuous methods companies employ while coveting their attention.