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Top 10 SMB and Midmarket Predictions for 2021


In all sectors, 2020 was a challenging year – and as a result, 2021 is challenging from a market planning perspective. The disconnect between 2020 and 2019 was so severe that it rendered spend forecasts virtually useless: IT suppliers reacted to shifting market trends in real-time. As we enter 2021, IT product and service suppliers look to create a context for understanding the range of outcomes that the new year may bring. Techaisle’s 2021 report series illuminates issues and requirements in the vast SMB market to support that effort.

To start 2021, here are our top 10 predictions.

1. Digital inequality will be more important than the digital divide

Although digital transformation is a priority for all SMBs, lack (or reallocation) of capital, absence of skills, and lack of management resolve will create digital inequality. All SMBs will not have equal access to a blueprint to organize digital transformation investments and activities. Some operations order will be critical to aligning digital business initiatives with business outcomes that justify what has become an economy-wide focus on digital transformation. Committed SMB users will gain significant process advantages, including reduced business process, IT costs, greater productivity, and business agility. SMBs with access to blueprints will be able to translate these process advantages into coveted business outcomes.

2. Quest for reinvention, innovation and resiliency will drive bursts of incremental transformation goals

In the face of continued uncertainty, SMBs will invest in short-term planning, assess outcomes, and pivot when necessary. The digital transformation vision will be ambitious and span all of the functions in an SMB organization, and all of the technology used to support its activities. Driven by the need to reinvent themselves, drive innovation and enable long-term resiliency, SMBs will focus on separating digital transformation components into two: one focused on technology and the other focused on business transformation and management culture. While individual targets will vary by the context within an SMB, the notion that technologies and culture/capabilities need to combine in bursts of interim, incremental investments to deliver optimal benefits will provide a starting point for SMBs to apply digital innovation frameworks.

3. The hybrid workplace will require HR focus and drive adoption of workspace, workflow solutions

Cloud technologies have given SMBs the power to assimilate, create, manipulate, and distribute information. Work-related productivity will neither be location-dependent nor device-dependent. It will be application dependent. SMB human resources will require active involvement with IT for employee onboarding/off-boarding. Cloud-native employees will see work as something they can accomplish from anywhere with an Internet connection and may shift time to address a mix of business and personal objectives. HR professionals will need to understand that rigid work environments are poorly suited to acquiring and retaining professionals conversant with new cloud-based processes. Current and potential employees who become comfortable with remote work will reflect the ubiquitous, always-on nature of cloud in their work habits. They will be unhappy in a work environment constrained in terms of location, time, and modes.

4. Meaningful customer partners and not trusted advisors will determine supplier success

The SMB customers will seek IT suppliers who can create value rather than provide value addition. This shift will necessitate the supplier to move beyond trusted partner status to becoming a meaningful partner of the SMB customer, invested in their business success. More than 70% of SMBs will want their IT suppliers to listen to business needs, guide them towards the right technology solution, and share vision and partnership with IT and business units. The nature of the sales relationship will be a critical determinant of IT supplier success within the SMB segment.

5. Pragmatism will overtake progressiveness in technology adoption for a future-ready organization

To improve manageability, reduce complexity, and limit sprawl, SMB pragmatism will overtake progressiveness. Technology choice and deployment complexity will create purchase inertia, empowering SMBs to seek suppliers capable of supporting a roadmap from the current state to a future-ready organization. SMBs will look for proof points and solutions that deliver tangible benefits within their environment. Questions such as – what will be the support requirements to capitalize on new functionality and the best strategy for optimizing the outcomes associated with each technology over time – will become commonplace conversation topics before selecting a brand, solution, and supplier.

6. Requirements for automation and enhanced IT services will become time-critical

SMB executive and corporate interest in digital transformation will be a unique business driver for IT services’ scale-up. The fear of digital inequality will be acute. To accelerate migration to support a mobile workforce, anxious SMBs will prioritize automation, application bandwidth, and analytics, each of which requires services outlay. SMBs will increasingly need support for hybrid IT environments spanning conventional and cloud infrastructure, which will strain the IT staff necessitating professional services skills. There will be an urgent need to provide business consulting aligning cloud capabilities with SMB’s business requirements, map specific cloud services to these needs, integrate cloud services with existing infrastructure and each other, and provide ongoing support. SMB issues in servicing hardware at home will demand home office software/hardware packs for service.

7. Security and risk mitigation will focus on a safe middle ground

SMB business leaders will need to respond to multiple risk management demands. Defense against cyber-threats will require a comprehensive approach spanning people, processes, and technology. To configure, integrate and deploy appropriate security systems to protect sensitive data for new work routines, SMBs will demand a safe middle ground that results in optimum business protection and access to the upside associated with cloud solutions. Middle ground refers to balancing new business outcomes that SMB executives can achieve via cost-effective cloud solutions with the need to safeguard users, data, and applications from malicious intruders. Vulnerability scanning, unified threat management, penetration testing, and user behavior analytics will be critical security priorities.

8. Systems of insight will move into the analytics mainstream

Analytics is becoming a significant force in the SMB market. In the past, systems of insight would have been beyond the means of SMBs. But the cloud has made highly-sophisticated toolsets and low-cost, on-demand infrastructure available to businesses of all sizes. ‘Systems of insight’ will join ‘systems of record’ and ‘systems of engagement’ as a significant consideration for IT/business strategy. These systems will integrate information from conventional and cloud-based applications. They will grow as automation grows and will deliver increasingly-critical perspectives to executives, timely input to line workers, clear and consistent input to administrative staff, and rich information to customers. Techaisle believes that systems of insight will move into the midmarket mainstream in 2021 and expand in importance across the SMB market over the next 2-5 years.

9. AI will arrive as a capability integrated within other solutions

As a concept, AI has lived in the peak of inflated expectations for many years. AI is entering a phase at which it will require more definition, helping SMBs better understand its uses and potential benefits. AI will arrive in SMBs as capabilities within other products than as a stand-alone offering. SMBs will begin to grasp the embedded reality of AI fully. SMBs will demand AI-driven answers to proactively prescribe actions to mitigate risk and drive the decision, business, and innovation agilities. As SMBs wrestle with change culture, technology will continue to advance so quickly that by the time the SMB is comfortable with data-driven decision-making, artificial intelligence will be operationalizing decisions that will be incomprehensible to the business executives. With AI, the challenge will no longer be how to trust data over gut instinct; it will be how to trust AI when insights into the decision-making process are not available within the cloud applications that SMBs are using.

10. Open source adoption will become an indicator of cloud success

One indicator of a shift towards digital literacy will be the use of open-source software. Open source will be an indicator of cloud comfort within SMBs, especially midmarket firms. Open source will represent advances in IT: new, faster, lower-cost, and higher-quality ways of delivering IT capacity in support of midmarket business objectives. Midmarket firms that are not comfortable with open source will likely struggle with cloud and may end up with “shadow IT” as advanced users will work with unauthorized open-source, low-code, no-code resources. IT will find merit in building familiarity and skills in open source. The percentage of SMBs believing that open-source technologies will have the most significant digital transformation impact will increase to 40%.

Bonus: SMB early adopter impact will determine 5G growth

The 5G genie is out of the bottle. There is truth in the widespread opinion that IoT’s (and edge computing’s) full unfolding is contingent on 5G networks’ pervasive deployment. Data shows that 36% of SMBs will increase edge computing investments, driven by the promise of 5G applications, specifically in asset tracking, machine networking, and telemedicine. Another 16% will wait and watch the results obtained from 5G deployment before beginning their adoption journey.

(Anurag Agrawal is the Founder and CEO of Techaisle, an actionable data driven market research and consulting company based in San Jose, CA)

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