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© SMB Group, January 2020. All Rights Reserved.
SMB Group
Top 10 SMB
Technology Trends
Laurie McCabe
Sanjeev Aggarwal
January 2020
2020
© SMB Group, January 2020. All Rights Reserved.
SMB Group
Top 10 SMB
Technology Trends
Laurie McCabe
Sanjeev Aggarwal
January 2020
2020
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Top 10 SMB Technology Trends for 2020
SMBs “Get” Digital Transformation, but Most Struggle to Take Action
Executing on Digital Transformation Pays Off for SMBs
SMBs Pivot from Point Solutions to Open, Extensible Application Platforms
SMBs Start to Expect SaaS Applications to Be Smart
Customer-Centric Initiatives Lead SMB Digital Transformation
SMBs Remodel the Workplace for the Changing Workforce
SMB Adoption of Cloud Solutions Continues to Rise, but One Deployment Model Does Not Fit All
SMB Mobile and IoT Investments and Innovation Are Poised to Increase with 5G
Beyond the Books: SMB Accounting and Financials Vendors Vie to Add New Value
SMBs Adapt IT Infrastructure to Address New Technology Requirements
© SMB Group, January 2020 All Rights Reserved.
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SMBs “Get” Digital Transformation, but Struggle to Take Action
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© SMB Group, January 2020
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SMBs want to put tech to work to streamline operations, improve productivity, attract new customers, get ahead of competitors and improve customer satisfaction. However, only 24% have started executing on a digital transformation strategy, and just 19% say they have well-defined plans in this area.(
Integration and difficulty in figuring out which solutions will work best top the list of obstacles, followed by age-old problems including a lack of IT skills, time and money to get things off the ground.
SMBs’ recognition of and desire to transform their businesses for a digital future is real, but the vast majority are still unprepared or underprepared to act on it. Vendors must create more accessible on-ramps to help SMBs move from aspiration to execution.
Say their company is “currently executing on a digital transformation strategy"
Strongly agree that “our company has a well-defined digital strategy
Up
from
33% in
2017
57% of SMBs say they’ve heard of digital transformation and understand what it means—a big jump jump from 2017, when just 33% said they understood the term what digital transformation is.
SMB Understanding of Digital Transformation
Over 80% of SMBs also agree that technology is reshaping their industries, businesses and workplaces.
SMB Technology Attitudes
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Executing on Digital Transformation Pays Off for SMBs
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Digital transformation pioneers are significantly more likely than their peers to be investing across 17 technology areas. They are placing their bets on a wide range of established and newer technologies to help them achieve their goals.
The top three established technologies in which SMB pioneers are investing are security and data protection, public cloud/software as a service (SaaS) and mobile. The top three new technology investment areas for them are converged IT infrastructure, the Internet of Things (IoT) and artificial intelligence (AI)/machine learning (ML).
Top Three Traditional and New Technology
Investment Areas for SMB Digital Pioneers
Traditional Technologies
New Technologies
Only about one-quarter of SMBs are currently investing in digital transformation initiatives, but their investment appears to be paying off. SMBs currently investing in digital transformation are 1.9 times more likely to forecast revenue increases than their counterparts with no plans for digital transformation and 1.3 times more likely to forecast increases than those planning for digital transformation.
SMB Expectations for Revenue Increase
SMBs that have already started down the digital transformation path also plan to spend more on technology than their peers: 2.1 times more than SMBs with no plans and 1.2 times more than those in the digital transformation phase.
© SMB Group, January 20120
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SMBs Pivot from Point Solutions to Open, Extensible
Application Platforms
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The cloud has made it easy for businesses to add new applications as required, but it hasn’t solved the problem of getting new solutions to work with existing ones. Many SMBs have acquired point solutions over time and patched them together in an ad hoc fashion. 80% rely on manual data entry, batch file uploads and/or custom code to meet all or part of their integration needs.
But as SMBs grow, it gets progressively harder for them to automate workflows across business functions, get a complete view of customers and get the insights needed for solid, proactive decision making. As a result, SMBs now cite application integration as their top technology challenge.
To solve this problem, 43% of SMBs are currently making investments to integrate their business applications, and another 33% are planning to do so.
Level of Business Application Integration
To reduce friction and cost, more SMBs will opt for pre-integrated solution suites built on extensible, open platforms. This approach makes it easier to build and integrate new applications with the core platform—and for SMBs to take advantage of that additional functionality.
Taking this a step further, low-code developer frameworks give developers access to the full technology stack by exposing features and functions via microservices and an abstraction layer. Visual, drag-and-drop development environments enable non-technical developers to build applications that easily integrate with the platform—and take advantage of its security capabilities and scalability.
Pre-built integration from business software vendor(s)
Third-party integration solutions
Custom code
Manual data entry via Excel/other batch file uploads
Methods of Business Appication Integration
© SMB Group, January 20120
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© SMB Group, January 2020
SMBs Start to Expect AI and ML Capabilities as
Part of the SaaS Package
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Vendors are adding AI and ML to help automate processes, answer questions more quickly and easily, and make better decisions. Many are also incorporating natural language processing (NLP) to provide a more intuitive interface to AI and ML capabilities. Use cases include the following:
New use cases are surfacing every day, and it’s getting harder to find a SaaS application without these capabilities or plans for them. By the end of 2020, SMBs will expect seamless access to practical AI and ML capabilities as part of the total SaaS package.
Empty text
Currently
investing
SMB Investment and Plans for AI and ML
SMBs' interest in putting AI and ML to work is still relatively modest. Many are just starting to understand the potential that these technologies hold to help them automate routine tasks and more readily see and understand what’s happening in their businesses so they can plan more intelligently for the future.
But leading SaaS vendors are already building AI and ML into their SMB solutions to give companies the power of these technologies without the complexity. By blending AI and ML capabilities into applications SMBs already use, vendors can enable SMBs to reap the benefits of these technologies without having to become AI and ML experts.
planning to invest in the
next 12-24 months
+
Customer-Centric Initiatives Lead SMB Digital Transformation
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Few SMBs will be able to tackle all of these areas at once. Those that rely on disconnected point solutions will find it particularly tough to implement new initiatives and also maintain a consistent, engaging customer experience. This will trigger the often uncomfortable—but necessary—move to replace disjointed point applications with more holistic CRM solutions that enable SMBs to add new capabilities in an incremental, yet integrated, manner.
Some of the specifics that SMBs will focus on as they pursue these goals include:
Attracting and retaining customers and maximizing growth are perennial goals for SMBs, but digital technology has reset customer expectations. Companies must deliver more ease, convenience and value—or customers will take their business elsewhere.
Therefore, it’s not surprising that SMBs are more likely to characterize technology investments in customer-facing areas as part of a digital transformation strategy than investments in other areas. SMBs also rate customer-centric initiatives as providing the highest return on investment as compared to those in other areas.
Tech Investment Areas SMBs Are Most Likely to Characterize as Part of Digital Transformation
© SMB Group, January 2020.
© SMB Group, January 2020.
SMBs Remodel the Workplace for the Changing Workforce
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SMB support for flexible, remote workplace options is also rising. Since 80% of U.S. workers would choose a job that offered the option to work remotely over one that doesn’t, this number should continue to rise.
SMB use of contingent workers to help staff through peak periods, work on one-off or specialized projects and fill in when the business can’t hire full-time workers is also increasing.
To accommodate different types of workers an workstyles, SMBs will use a wider variety of collaboration tools—such as chat, instant messaging, video conferencing, file sharing, stream-based collaboration and unified workspaces.
More SMBs will also deploy human resource (HR) solutions to provide employees with a more consistent and engaging experience.
Improve new
employee recruitment
Demographic, technological and cultural shifts are driving SMBs to remodel the workplace to attract and retain the talent they need to grow.
Although there are now five generations in the workforce, SMBs are struggling with a talent and skills shortage,. This is driving investments in technology solutions to improve employee recruitment and productivity
SMB Employee Productvity and Recruitment Goals
SMBs are also investing in AI- and ML-powered business solutions to automate workflows and reduce errors in tasks such as data entry, data extraction, scheduling, payroll and more.
These smart applications allow employees to spend more time developing critical soft skills and working on value-add projects than they are to take away jobs. By providing smarter, user-friendly tools that people want to use, they’ll also help SMBs attract new talent.
Improve employee productivity
*International Workplace Group Annual IWG Global Workspace Survey, 2019
© SMB Group, January 2020.
SMB Adoption of Cloud Solutions Continues to Rise, but One Deployment Model Does Not Fit All
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However, one size does not fit all—and it won’t for the foreseeable future. Most SMBs will continue to rely on multiple deployment models.
Drivers for on-premises deployment include the desire to more fully manage and control applications and resources; regulatory requirements; and satisfaction with existing on-premises solutions. Some SMBs also say they’re suffering from “subscription fatigue” and are expressing a preference for a one-time expense over ongoing subscription payments.
SMBs will also continue to use a combination of cloud and on-premises solutions. Some choose to use on-premises infrastructure for business-critical operations and sensitive data, and to use the public cloud for low-security, high-volume needs. SMBs may also opt for a hybrid approach to accommodate seasonal or peak demand periods—using the cloud to augment internal requirements as needed.
SMB adoption of public cloud solutions has been rising steadily and will continue to do so.
This isn’t surprising, as 82% of SMBs agree that using new technology effectively is key to business growth. But time, money and expertise constraints make it tough for SMBs to deploy and manage the new solutions they need to grow.
As the speed of innovation in the public cloud accelerates, it will only get more difficult for SMBs to keep pace with on-premises deployments or moving older on-premises solutions to the public cloud.
© SMB Group, January 2020
SMB Mobile and IoT Investments and Innovation Are Poised to Increase with 5G
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2017
While 4G was pivotal to the explosion of mobile apps and social media networks, 5G will play a key role in supporting IoT, which is projected to connect billions of everyday objects to the web by the 2020s. 5G will help facilitate this growth, providing IoT with stronger, denser connectivity for things such as autonomous cars, smarter buildings, predictive maintenance, asset tracking and metering.
5G will carve a path for entrepreneurs to create new products, services and even industries built for new IoT use cases. And it will offer all SMBs—which are already quite interested in using IoT—additional ways to benefit from utilizing IoT solutions in their businesses.
This focus and investment will increase significantly as 5G rolls out over the next few years. With speeds of 20 GB per second, 5G will make 4G LTE, with a peak speed of 1 GB per second, look and feel slow. 5G mileage will vary depending on factors such as location and the devices using the network, but users will likely reap at least a 10x performance jump.
5G will significantly reduce latency issues. Consumers using 5G will be able to download videos in less than a second, while businesses using the technology will enjoy “lagless” video for meetings, remote field service calls, training and more. 5G will also enable augmented reality (AR) and virtual reality (VR) for new use cases where network reliability and speed are vital, such as for remote medical and industrial diagnosis.
5G isn’t ready for prime time yet, but more SMBs are starting to consider its potential implications.
SMBs are already sold on mobile technology as a key business enabler. 75% are investing in or are planning to invest in mobile technologies, up from 70% in 2017.
2019
2017
© SMB Group, January 2020
Beyond the Books: SMB Accounting and Financials Vendors Vie to Add New Value
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These solutions are poised to become even more important as vendors harness technology to move beyond the books to address financial and operational pain points that plague many SMBs. Much of this innovation revolves around providing SMBs with faster access to better data. Some of the areas where accounting and financial software vendors are focusing on include:
Financial applications are the primary system of record for most SMBs—and SMBs are significantly more likely to use accounting and financial management software than any other business solution.
Top Three Business Applications Used by SMBs
© SMB Group, January 2020
SMBs Adapt IT Infrastructure to Address New Technology Requirements
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The growing volume and sophistication of security threats also continues to loom large for SMBs, which cite security as their top technology challenge. This will drive more SMBs to replace point security products with comprehensive, multi-layered security solutions that incorporate AI and ML in order to provide more proactive, preventative protection against threats.
Some of the innovative solutions SMBs will invest in include: Converged IT infrastructure, PC as a Service and high-performance wireless networking.
In the age of digital disruption, more SMBs are rethinking their IT infrastructure requirements, and considering new infrastructure solutions to support the needs of their businesses both today and into the future.
New infrastructure solutions can help SMBs to more easily accomplish the following tasks:
Technology Investments in Converged Infrastructure
2017
2019
SMB Group
About SMB Group
Founded in 2010, SMB Group is a technology industry research, analysis and consulting firm, focusing exclusively on the small and medium business (SMB) market.
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For information about licensing SMB Group’s 2020 Top 10 SMB Technology Trends, please contact Lisa Lincoln, Director of Client Services:
© SMB Group, January 2020. All Rights Reserved.
All data is sourced from the following SMB Group survey studies, unless otherwise noted:
Information Sources
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