New Yankee Group SMB data predicts severe cutbacks in tech spending, particularly in cloud computing and Software as a Service (Saas) as well as unified communications. The bright spot? Mobile applications.
Each month, SMB expert Steve Hilton of Yankee Group answers real reader questions about small and midsize business technology in Ask Steve.
I'm not the first to tell you the economic situation is challenging. Small businesses, large businesses, channel partners, vendors: everyone is feeling the pinch. How have SMBs scrimped and saved? Which SMB-facing technology sectors are faring better? Yankee Group has some new survey data addressing these questions.
Jocelyn from Little Rock, AR: What kind of impact has the recession had on small businesses? Do you have any data to share for free?
Thanks for asking for free data, Jocelyn. This is an SMB hallmark: making due with as tight a budget as possible. I respect that greatly, so here are some data.
After a difficult 12 months of economic recession, business optimism is almost as low as it was during the 1979-1980 recession, according to the National Federation of Independent Business' (NFIB) "Small Business Economic Trends, August 2009." NFIB measures 10 indicators of small business health from the following categories: labor markets, capital spending, inventories, sales, inflation, profits, wages, and credit markets. SMBs continue to anticipate difficult selling, capital, and political environments.
According to the Yankee Group Anywhere Enterprise-SMB: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, Wave 1-4, a whole series of technology spending will face severe reductions in the next 12 to 24 months. Cloud computing/SaaS implementations face the largest hurdles. These solutions were fairly early-stage for SMBs and the recession caused SMBs to re-think new technology adoption. In addition, UC and enterprise infrastructure faces challenges in the near future.
Percent of SMBs expecting severe reductions in technology investment by category over the next 12-24 months
Source: Yankee Group Anywhere Enterprise-SMB: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey
But cutting back on technology is only one area of cost contraction for SMBs. According to the same survey, 63% of SMBs have cut back on travel, 51% have started using equipment more carefully (i.e., employees aren't using their laptops in the bathtub anymore), and 26% have increased the number of conference calls. We had hoped the recession would increase the adoption of video conferencing, but in fact only 7% of SMBs have increased their use of video-based calls. I guess Cisco's TelePresence will have a different day-in-the-sun for small businesses.
But let's keep in mind that this recession will pass and SMBs will come back to the negotiating table. Where do we expect post-recession spending to be most robust? 28% of SMBs believe smartphone implementations are the most important tech priority in the next 24 months. Similarly, 22% of SMBs believe mobile-enabled applications are the most important tech priority. Obviously linked, these two priorities create great opportunities in supplying browser-based, mobile-enabled applications for SMB employees.
Smartphones and Mobile-Enabled Applications Top the Tech Priorities for U.S. SMBs in the Next 24 Months
Source: Yankee Group Anywhere Enterprise-SMB: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey. Answers to survey question: "In your opinion, which of the following technologies will be the top priority for your organization over the next year? (Please select up to two.)"
Despite the economic maelstrom, SMBs favor mobility-related technology over other technology solutions to help them through the coming year. Mobile voice and to a lesser extent mobile data have become woven into the work habits of SMB employees, but we have a long way to go.
Mobile applications aren't as embedded into critical SMB business processes as desktop-based applications. SMBs want to mobile-enable their front-end applications like CRM, merchant solutions, and sales force automation, but today the complexity of doing these implementations often leaves SMBs in the lurch. We expect the vendor and service provider community to step up to the plate over the next 12-24 months to meet this SMB need.
Thanks again for the question, Jocelyn. And hang in there.
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Steve Hilton is VP of Enterprise and SMB research at Yankee Group. Hilton is recognized as a leading, global SMB expert.
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