Consumerization, software-as-a-service, and several other industry developments are affecting how application vendors approach smaller organizations.
Posted Jan 15, 2008
Adoption of CRM and similar applications by small and midsize businesses (SMBs) is no longer in doubt, according to new research by AMI-Partners. The report, entitled "Top Trends Reshaping the Small and Medium Business Solutions Market," identifies seven interrelated ways in which the market will change.
"There's a changing dynamic in the market, with the potential to help businesses that haven't been customers of solutions vendors," says Laurie McCabe, vice president of SMB insights and solutions with AMI-Partners, and the report's author. "We've taken a look at the things reshaping how vendors approach SMBs, who the customers are, and what they're expecting."
The seven factors listed in the report are:
Of these, consumerization may be the most noticeable to casual observers. After numerous attempts to deliver truncated versions of application suites originally intended for large enterprises, vendors are realizing that ease of deployment and use are critical considerations. While people are getting more comfortable with technology, technology is getting more comfortable as well. "Tech doesn't have to be hard, and consumer-oriented vendors like Amazon and Zoho are broadening their scope to include small business," McCabe says. "If implementation and deployment is a hurdle, many SMBs won't do it. Vendors must do what needs to be done to ensure the user experience is closer to the ease of an Amazon or Facebook."
SaaS, touted by many as an ideal option for small businesses -- and still on the rise within the sector -- hasn't reached anything like ubiquity yet. In 2004, 10 percent of small businesses and 15 percent of midsize businesses used SaaS, according to the report; those figures had doubled by 2007, to 21 percent and 30 percent, respectively. As one might expect, the availability and falling prices of broadband Internet connections has helped the rise of SaaS, but other factors have played -- and will continue to play -- more important roles.
- The Consumerization of Business Solutions;
- Software-as-a Service (SaaS), Chapter 2;
- Turning the Integration Tide;
- Transition to the Insight Economy;
- Upward Mobility;
- SMBs Catch the Web 2.0 Wave; and
- Workforce Shifts Change the Face of Small Business.
In the report, McCabe outlines several of these factors:
No single trend discussed in the AMI report truly stands alone, but McCabe's last bullet point includes a degree of insight into SMB users themselves, and how assumptions about them may need to change. "Demographics are shifting," McCabe says. "The trend of people starting their own businesses is on the uptick: Young workers just out of college, retirees and others who have left the 9-to-5 business world, stay-at-home mothers who don't want to give up on business and entrepreneurship -- all need business solutions to support them."
The diverse backgrounds of these potential customers will spark a need for better-targeted offerings. "SMB marketing has traditionally been targeted to companies that want to grow their business, but many of these entrepreneurs don't want to grow beyond being home-based. They want to operate on their own terms, and may be turned off by the growth message," McCabe warns. "Vendors must recognize this and create best-fit opportunities."
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- The broadening of the SaaS playing field from niche players to also include large, established vendors;
- development of SaaS ecosystems, offering customers a more cohesive approach;
- emergence of varied, flexible, and affordable pricing options that align more closely to consumption;
- richer, more flexible functionality; and
- the growth of industry-specific SaaS solutions.
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