2006 predictions for SMBs

SMB predictions -- SaaS, ASPs and MSPs
By Jeff Kaplan
Jeff Kaplan founded THINKstrategies in 2001 to help IT solutions companies, IT executives and IT venture capital firms re-THINK their IT strategies and redeploy their limited resources to meet their corporate objectives.

A year ago, I predicted "services, services, services" would be the focus of SMBs in 2005. I'm pleased and proud to boast that my predictions have become a reality.

SMBs are quickly adopting a variety of managed application, network, security, storage, hosting and other 'utility computing' services as they seek more ways to offload, or "out-task", various aspects of their IT/telecom requirements.

In 2006, a relatively new acronym of SaaS -- Software-as-a-Service -- will be added to the alphabet soup of ASPs (application service providers) and MSPs (managed service providers), and become a mainstream practice dramatically changing the way SMBs acquire and utilize software.

Rather than continuing to purchase costly and cumbersome packaged applications, SMBs will expand the array of SaaS alternatives they utilize. These software service alternatives will be further validated by Microsoft's promised entry into the SaaS business.

The expanding array of SaaS, ASP and MSP players will create a buyer's market for SMBs. They will be able to select application and IT infrastructure management services from a variety of vendors, carriers, resellers, integrators, outsourcers and specialized service providers (xSPs).

The rapidly increasing, yet relatively undifferentiated choices will also create buyer confusion and commodity pricing pressures for the service providers. This will mean serious financial challenges and the demise of some secondary players.

The shift of the IT industry to a services model will only be slowed if a significant number of SMBs are harmed by providers that can't deliver reliable and cost-effective service solutions. If quality, reliability and cost problems emerge, the service movement will be slowed and could be reversed, much like the backlash against offshoring in 2005.

2006 outlook: Open source, offshoring, Web 2.0
By Paul Gillin
Paul Gillin is a technology writer and consultant and former editor-in-chief of TechTarget. His Web site is www.gillin.com.

There's nothing like a good paradigm shift to get you out of bed in the morning, don't you think?

The forces are massing for some big changes in IT industry dynamics. We need this. The tech landscape has been pretty dry these last few years. It won't be a year of epic events, but change that is already under way will accelerate.

Here are my annual 10 predictions of what to look for in the next year:

Software trends -- A convergence of trends epitomized by Google and the amazing speed at which it delivers new features will cause vendors and enterprises to change the way they build software. The new approach will be open-beta development with community participation and frequent new releases. Essentially, we'll use software while it's being developed.

This trend plus code reusability will change commercial software development. Vendors that don't leverage these tactics will become irrelevant. Users will also demand that commercial software take on a more service-oriented approach so they can mix and match. As a result, the industry will begin to shed its not-invented-here bias and truly reform its approach to software. This will cause shifts in the cost structure of the business and eventually to changes in the power structure. But that's a good thing, right?

The move to open source -- Large amounts of once-proprietary software is now going open source. The trend is epitomized by Sun's commitment to give away its entire enterprise software library -- except Java -- as open source. But reserve your applause for this apparent generosity. A lot of the stuff being thrown into the GNU Public License domain wasn't very popular anyway and an open source strategy is one way for vendors to hand off expensive support costs to the ''community." Still, there's no excuse for you not to check sourceforge.net before plunking down money for any commercial application.

Web 2.0 -- This is already a buzzword but the concept is important. Web 2.0 embodies ideas like software as a service and open development, and wraps it in the bigger notion that the value of the Internet is in the ''long tail," or the thousands of special-interest blogs and Web sites. Publisher Tim O'Reilly wrote an enlightening essay on the topic that if Netscape embodied Web 1.0 then Google embodies Web 2.0. Become familiar with the concept because you're going to hear a lot more about it.

Software as a service (SAAS) -- More importantly than getting its own acronym, SAAS has got traction in the market, particularly among small and midsized businesses. Salesforce.com laid the groundwork but now service providers are sprouting up everywhere. A recent report by Cutter Consortium found users are increasingly turning to service providers for financial applications, human resource management and the ubiquitous ''other." The reason: better ROI. Here's another big challenge to conventional packaged software.

Data center remake -- A major overhaul of corporate data centers that began a couple of years ago will accelerate driven by two technology innovations: virtualization and multi-core processors. The latter gives servers a turbo boost by tying together two processors on the same chip, yielding about a 50% performance boost. Virtualization, popularized by EMC's VMware subsidiary, is solid enough to go mainstream. Expect Microsoft's entry into this market, along with attractive changes to Windows licensing, will jump-start interest. And keep an eye on the Xen open source option. There's lots of opportunity for consolidation and cost savings here.

Stolen identities -- It's remarkable that, with all the highly publicized cases of credit card and customer record loss early this year, there hasn't been a major identity theft. That's gotta change. Professional criminals are plying their trade online, phishing is surging and online commerce is mainstream. It's a recipe for disaster. I don't know if a blowup will occur in 2006, but some sort of cataclysm will raise public awareness soon.

Offshoring, round two -- This past year brought the predictable backlash against offshore outsourcing, with tales of soured relationships and early contract terminations. But expectations were too high to begin with. The reality is that offshore outsourcing is a long-term growth business, and Indian firms, in particular, are offering increasingly sophisticated services. Most people who went in with realistic expectations of 20% to 25% savings haven't been disappointed. The next round of growth will be more sustainable.

Vista beats shipping deadline -- Reports are already swirling that Microsoft is going to miss its promised summer ship date for Windows Vista, the successor to Windows XP. Don't count on it. Microsoft has too much at stake. Messrs. Gates and Ballmer know that Mozilla Firefox is the open source camel's nose in the Windows tent, and it had better give retailers and PC makers a merry 2006 holiday shopping season to avoid further pressure from Linux. Yes, Vista will be buggy, but it will ship in time for the holidays. Mark my words.

Year of the blogger -- One of my worst predictions ever was from 2003: ''Blogging's wave has already crested now that millions of online diarists are realizing that not that many people actually read this stuff." I missed the point, which is that small but passionate audiences are the core of ''long tail." The technology world is already being reshaped by blogging. Sites like Technorati and Tech.Memeorandum are the kingmakers who choose who gets heard. Podcasting is an explosive new phenomenon that takes blogging to another level. The mainstream media is already taking cues from the blogosphere. Get to know it because it counts.

Convergence gets real -- It's been a buzzword for years, but convergence will take shape in 2006. Key drivers: the success of VoIP services like Skype and Vonage, along with consolidation in the telecom industry. Converged devices will emerge that look like a cross between phones, TVs, GPS receivers and music players. They'll work over cellular networks outside the office and Wi-Fi networks inside. In Japan, cell phones are taking on credit and affinity card features, realizing the promise of smart cards. In the office, the ubiquity of high-speed Internet connections will drive converged services that improve group productivity. Convergence may finally deliver what groupware was supposed to achieve 20 years ago.

Performance-in-a-box?
By Ed Tittel
Ed Tittel is a full-time freelance writer based in Austin, Texas, who regularly covers Windows, security and markup languages for multiple TechTarget Web sites. He also writes regularly for Tom's Hardware, TechBuilder and Processor magazine. E-mail Ed at etittel@techtarget.com.

As I pondered the IT outlook for 2006, I noticed that my predictions for 2005 were not only correct, but they will also carry well into 2006. Let's hope my predictions for the New Year are just as accurate.

Better times ahead. The economy will continue on a modest but palpable upswing that was carried all through 2005, and it looks reasonably good to continue throughout 2006. I expect to see more business, and perhaps an added headcount here or there, as work expands beyond what even overtime and extra hours can cover. Let's hope it also means bigger paychecks and bonuses for those of us already on the job as well.

"Security-in-a-box" meets "performance-in-a-box." If 2005 was the year of the Internet/security device (NAT, firewall, DHCP, Web server, file server, print server, LAN switch and so forth, all in a sub-$300 box -- often under $200), then 2006 looks set to be the year of the Internet/security/performance device. In other words, look for predefined quality of service and service priority capabilities to fold into the current omnibus offerings already available. Talk about doing more with less … these cigarette pack or paperback book-sized enclosures can really pack in the capabilities, thanks to royalty-free open source Linux kernels and inexpensive, powerful ARM processors.

Security. Look for rootkit detection to become another checkbox item in Internet security suites, along with antivirus, antispyware and antispam protection (not to mention firewalls, pop-up blockers, phishing protection and more). I think you'll also see more low-cost managed security offerings reaching out to tap into the budget-wary and cost-conscious SMB market, flush with bucks and success from the enterprise and midsized business sectors.

More data-driven services: With Web services ruling most of the business world, more and more ways to use dynamically updated data collections and information, particularly as they relate to vendors, suppliers, customers and partners, are coming into play. Whether or not they trickle down all the way to the smallest of SMBs is more than I can guess, but the potential for such tools to change business methods is tremendous even at the mom-and-pop level. Did you want fries, or an ODBC connector with that?

Strategy
By Richard Skinner
Richard Skinner is the author of the book "IT is about the Strategy". He has worked in Information Technology for forty years. Richard and his business partners offer strategic planning services to SMBS.

At long last the light bulb comes on!

Every year I predict the same thing and every year I am disappointed. But I remain the eternal optimist. Let's see if 2006 is the year. The light bulb will come on in the SMB and the business will at last grasp the concept that IT is not about the technology, IT is about the Strategy. The SMB will develop a strategic approach that enables them to kill those wrong-minded software development projects, outsource that infrastructure, and focus time, energy and money on projects and technologies that indeed provide a competitive advantage to the business.

The small SMB will select the business layer strategy and:

• Stop constructing their own infrastructure and instead outsource infrastructure to external independent hardware integrators.
• Stop wasting time and energy developing or modifying back office applications and outsource these to independent application integrators.
• Start focusing on customer facing applications and building the business a technology competitive edge.

The medium sized SMB will select the business model strategy and:

• Document their business flow and model.
• Document their technology model and accompanying views.
• Document the deltas between the two and identify the technology areas where the business needs to focus time, energy and money.
• Define their strategic areas of focus.
• Define their strategic drivers.
• Turn those strategic areas of focus into technology projects and execute.

The larger SMB will select the business process strategy and:

• Conduct a strategic assessment.
• Develop a process and service centric strategy.
• Identify critical issues and strategic moves.
• Focus on the strategic trilogy:
  
  • Processes and process reengineering
  • IT organization and realignment
  • Technology architecture
• Plan, build, and run with a service mentality.

A well defined strategy will drive the SMB in 2006 and prevent technology from continuing to create a tangle of business problems. The focus will move from technology to strategy and the SMB will realize its full potential.

Or not!