SMB Vendor Opportunities and Strategies: The market for enterprise apps, security, systems management and outsourcing

• On demand. SMBs are attracted to the opportunity to have access to the types of functionality larger companies have expected for some years, and the SMB segment will be responsible for the most revenue generated through 2009, in both on demand CRM and on demand ERP.
• Managed mobile services. Interest has increased significantly in the last two to three years and it is is one of the few markets where the market opportunity for SMBs is greater than medium to large organizations from a value and growth perspective.
• Contact centers. SMBs are driving contact center spending in the US and Western Europe; US small contact centers will increase their technology spending from $821m in 2004 to $972m in 2009.
• Outsourcing. Although the percentage of SMBs that outsource or would consider outsourcing is relatively low, vendors should continue to target SMBs for outsourcing since there are areas that SMBs often need external support with security and email issues.

• Identify and quantify future growth opportunities based on this report’s analysis on value and volume breakdowns for different market segments, up to 2012.
• Enhance the competitiveness of your products and services with this report’s strategic recommendations detailing how to improve your go-to-market strategy, SMB IT spending habits, purchasing behaviour, vendor preferences and influential people within the SMB sector.
• Understand key dynamics and factors influencing the SMB market to enable you to assess your company’s position in the market.
• Assess the SMB competitive landscape with this report’s insight into market drivers and barriers to technology adoption. The report includes explanations of new delivery models that suit the SMB market such as hosted and on demand.

• In each of the SMB is the fastest growing market examined in this report. Key Organizations with 250-999 employees are growing at a CAGR of 9.4% in the enterprise applications market from 2005 to 2010.
• Within the next two years small enterprises be investing far more in mobile devices and applications, driven by the fact that mobility can improve business functionality and create more flexible working.
• IP is changing the way people work, particularly at the SMB level. Smaller SMBs are expected to adopt IP technology in the coming years as part of their contact center solutions.
• SMBs are not always risk-averse. The lack of legacy issues, specialized nature of their business and the pressure to differentiate make smaller enterprises more likely to take risks with new technologies. Very large enterprises tend to focus on strategic issues such as a vendor’s financial stability or breadth of their solution offering.

• Where are the growth opportunities in the SMB market?
• What areas of IT are SMBs investing in?
• How should vendors target the SMB market?
• What are the barriers to adoption of technology?
• Which vendors do SMBs consider to be leaders in their field?
• How do SMBs prefer to buy technology (e.g. hosted/ on demand delivery is popular with SMBs)?
• Would SMBs consider outsourcing?
• Who are the most influential people in IT buying decisions in SMBs?

SMB Vendor Opportunities and Strategies

Executive Summary

Market outlook

Opportunities in enterprise applications

Opportunities in systems management

Opportunities in security

Opportunities in collaboration and mobility

Opportunities in contact centers

Opportunities in outsourcing

Chapter 1 Introduction

Who is the target reader?

Defining the SMB market

Chapter 2 Market outlook

Summary

Introduction

Technology penetration amongst SMBs

The buying habits of SMBS

IT purchasing decisions

Vendor recommendations

Chapter 3 Opportunities in enterprise applications

Summary

Introduction

Enterprise applications services

Challenges facing enterprise application providers in the SMB market

Making enterprise application services relevant to SMBs

Key success factors

Hosted SMB enterprise application services

Conclusions

Customer relationship management (CRM)

CRM penetration and investment by sizeband

Market drivers

CRM evolution

On demand CRM

Why on demand for CRM?

Vendors’ take on on demand CRM

The on demand CRM market is increasingly competitive

Market trends favor hybrid on demand / on-premise solutions

Vendor recommendations

ISVs and VARs develop customized applications

Supply chain management (SCM)

Technology penetration in the SMB market

Business intelligence

BI penetration by enterprise size

Channel strategies are a crucial factor for success in the BI market

Who makes investment decisions for BI?

Vendor perceptions in the BI market

Chapter 4 Opportunities in systems management

Summary

Introduction

Service oriented architecture

On demand

Defining the market

Service orientated architectures and on demand

The drawbacks of on demand

Market take-up of on demand

Vendor recommendations for on demand

Chapter 5 Opportunities in security

Summary

Introduction

Targeting the security message for SMBs

SMB adoption of security solutions

Chapter 6 Opportunities in collaboration and mobility

Summary

Collaboration

Mobility

Take-up of mobility solutions by sizeband

Managed mobile services: taking control of the pervasive enterprise

On demand/hosted solutions

Chapter 7 Opportunities in contact centers

Summary

Introduction

The SMB contact center opportunity in Western Europe

Growth at the low end

Vendor recommendations

Simplicity is key for the low end

Hosted contact centers

The US SMB contact center opportunity

Technologies currently used

Vendor recommendations

Price sensitive yet value for money

Start small think big doesn’t mean growing pains

All-in-one paves the way

Focused Channel partnerships for success

Hosted solutions

Attractions of a hosted solution

Market drivers

Concerns about hosted solutions

Does the growth of IP spell the demise of TDM?

Open source software has clear cost benefits for SMBs

Chapter 8 Opportunities in outsourcing

Summary

Introduction

SMBs show traditional attitudes to selecting IT vendors

SMBs are more likely to trust a national telecoms provider or a national ISP for managed services

Many different vendors are supplying the UK SMB market

SMBs are generally happy with their service providers

A relatively low proportion of SMBs currently oursource their IT services

The majority of SMBs manage their firewalls in house

Security is a key consideration in IT outsourcing decisions

The area that is most outsourced is security updates and patching

The most pressing technical requirement for SMBs is security

SMBs look to vendors to provide security and Internet connectivity

The majority of SMBs have some form of risk mitigation in place

Barriers to outsourcing

Cost and loss of control

A small proportion of SMBs can foresee a time when their IT function is fully managed externally

Conclusions: outsourcing is still a relatively low priority for SMBs in the

UK

Index

List of Figures

Figure 2.1: Large enterprises have the most favorable IT budget growth expectations from 2006 to 2007

Figure 2.2: Technologies that small enterprises currently have or use

Figure 2.3: Technologies where small enterprises are considering investment in the next six months

Figure 2.4: Technologies where small enterprises are considering investment in six months to two years time

Figure 2.5: When choosing an IT solution smaller enterprises value leading-edge technology more

Figure 2.6: Degree to which particular roles within small enterprises make IT purchasing decisions

Figure 3.7: Small enterprises’ preferred approach to buying enterprise applications

Figure 3.8: Vendors that small enterprises believe to be leaders in the field of enterprise applications

Figure 3.9: CRM investment and penetration levels are related to the enterprise size

Figure 3.10: SMBs adoption is an important factor in the future growth of the BI market

Figure 3.11: Most influential positions within small enterprises when making investment decisions regarding business intelligence solutions

Figure 3.12: Vendors that small enterprises believe to be leaders in the field of business intelligence solutions

Figure 4.13: Extent to which small enterprises currently have or use IT systems management solutions

Figure 4.14: Small enterprises that are considering investment in IT systems management solutions in the next six months

Figure 4.15: Small enterprises that are considering investment in IT systems management solutions in six months to two years time

Figure 4.16: Small enterprises’ preferred approach to buying IT systems management solutions

Figure 4.17: Most influential positions within small enterprises when making investment decisions

regarding IT systems management solutions

Figure 4.18: Vendors that small enterprises believe to be leaders in the field of IT systems management solutions

Figure 5.19: Extent to which small enterprises currently have or use security solutions

Figure 5.20: Small enterprises that are considering investment in security solutions in the next six months

Figure 5.21: Small enterprises that are considering investment in security solutions in six months to two years time

Figure 5.22: Small enterprises’ preferred approach to buying security solutions

Figure 5.23: Vendors that small enterprises believe to be leaders in the field of security solutions

Figure 6.24: Larger enterprises have a higher penetration of mobility technologies

Figure 6.25: Small enterprises’ preferred approach to buying mobility solutions

Figure 6.26: Most influential positions within small enterprises when making investment decisions regarding mobility solutions

Figure 6.27: Vendors that small enterprises believe to be leaders in the field of mobility solutions

Figure 6.28: Managed mobile services in the mobile solutions stack

Figure 7.29: US small contact center technology spend

Figure 7.30: Evolution and sizebands of US hosted contact center services

Figure 7.31: How would you rather pay for a hosted contact center service?

Figure 8.32: When selecting an IT vendor the most important factors are the standard of customer service and SLAs

Figure 8.33: Only a small proportion of SMBs choose to outsource the management of their firewalls

Figure 8.34: SMBs expect vendors to provide security and Internet connectivity services

Figure 8.35: 40% of SMBs state cost as the strongest reason preventing them from outsourcing

List of Tables

Table 3.1: Global enterprise applications market forecast 2005-2010, by sizeband ($m)

Table 3.2: Global CRM market forecast 2007-2012, by sizeband ($m)

Table 3.3: Global on demand CRM market forecast 2007-2012, by sizeband ($m)

Table 3.4: Global SCM market forecast 2007-2012, by sizeband ($m)

Table 3.5: What is your preferred approach to buying BI technologies?

Table 4.6: Enterprise adoption of SOA by sizeband

Table 6.7: Global enterprise collaboration market forecast 2007-2012, by sizeband ($m)

Table 7.8: Western European APs and technology spending size band comparison