After years of tough macroeconomic times in which most small companies had no cash for technology investment, it may finally be time for European SMEs to spend. In a recent Analysys Mason report, “Top Technology Trends for European SMEs in 2011,” principal analyst Steve Hilton weighs in on top SME technology trends in 2011 for the European market, including mobile application integration and the rise of cloud-based services.
By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.
What are the indicators that things are about to turn around economically for some SMEs, and in which geographic markets will this most likely be the case?
Hilton: Some of the indicators are pretty standard, things like gross national product and production metrics, stability, currencies and the availability of credit. A lot of SMEs rely on banks for credit. Credit has become a bit more available in Europe, but is pretty tight in the U.S., which is why the SME environment in the U.S. is not as good.
As far as where, some Western-Central European markets like Switzerland, Germany and Austria are looking good. There are some soft spots in Europe like Portugal, Spain and Greece that have had a hard time. Places like Hungary, Poland and Ukraine are starting to see some signs of growth, not as strong as those Western-Central European markets though. I would put the UK and France in the middle of the pecking order. Things aren’t great but aren’t awful.
In terms of technology, why are predictions different for SMEs than the enterprise?
Hilton: They aren’t necessarily different. For the last three years, there’s been an underinvestment by SMEs in technology. They really had to pull back because their revenue stream had dried up. A lot of the technology they have is old, so it’s time for a refresh. We’ve tried to focus on some of those things and what changes we think some SMEs should be implementing, and those things that aren’t hugely capital-intensive like cloud-based services and mobile applications.
It’s still a challenging economic environment. I would love to say in the next 12 months I expect most SMEs to rip out their network infrastructure and put in new switches, routers and gateways, but let’s be realistic.
Can you be specific about some examples of potential mobile applications that will experience uptake among SMEs?
Hilton: I think it will depend on the type of SME. If the SME is a bit larger, 100-200 employees, I think this is a good time to think about your CRM solution and its mobile enablement.
If you’re a smaller SME, under 100 employees, you could consider a CRM solution, but I think there are also consumer applications to look at. It’s common for consumer technology to spill over into the business sector. If you have a small fleet of vehicles, you could use some sort of tracking software to see where they are from their smartphone, or some sort of time and expense software, more common stuff. There are also simple HR timekeeping applications. It’s not all enterprise-grade applications, but a lot of SMEs don’t need a gold-plated enterprise solution.
Why haven’t vendors or service providers started capitalising on the value of mobile applications in an applications store environment for SMEs?
Hilton: There are probably a few reasons. The first—there’s not one vendor that is super dominant in the applications space. The one that is probably most dominant is Microsoft for common productivity tools like email. Once you go into the CRM space, Microsoft isn’t dominant. If you go into accounting or finance packages, there’s no vendor that’s really dominant there either. Oftentimes these vendor market shares vary substantially by country for these applications in SMEs. Maybe they don’t feel like they have enough financial incentive to focus on the SME market for mobile enablement because they find that they can make a lot more money by focusing on the large enterprise first.
Another problem that is common with large and small businesses is that the user interface (UI) on a mobile device hasn’t completely been understood. The application has been built for a desktop or laptop environment, a screen that is 14 inches or so. So trying to think about putting that application on a screen that is 3 or 4 inches, it takes a new mindset. Even the best applications, when rendered on a mobile device, are not all that great, but the best we have right now.
In the enterprise space, security would be another issue. How much of that data do you really want on a mobile device? In a small enterprise, unless you’re a company that’s 100-200 employees, you probably don’t care as much.
How will these SME mobile applications packages work and be beneficial?
Hilton: Imagine a carrier pulling together a group of applications that is targeted at a worker type. The carrier knows they work; they would be pre-tested. Today when you download an app, the thing doesn’t always work. If you’re a small business and you’re trying to download these apps, you’re wasting business time. The idea is by pre-testing it, you know it works. The carrier, like Vodafone or Orange, would give that to the SME.
How will the use of cloud services improve networking strategies for the SMEs and growth? Is this to say that SMEs will eventually do away with on-premise hardware for these apps?
Hilton: I don’t think any business is going to take their entire on-premise environment— all their servers and apps—overnight to cloud. However, over time I could see small businesses doing away with just about all they have on-premise. With a small business you have an email server with Exchange, a Web server, some kind of finance and accounting package, a CRM solution, an HR package—all those things, you could move to the cloud little by little and probably should, but it’s going to take years. If you’re a small business, you don’t just rip out technology because it’s old. When it’s broken, you’ve outgrown it, or you’re moving offices— that’s the time to start thinking about the cloud. In Western Europe, we forecast that of all the public cloud that’s going to be out there by 2015, half of it will address the SME market.
Small business owners have built their business from the ground up, so they can be control freaks. However, they have to temper that with how much they want to invest in the support of the on-premise stuff.
hat do SMEs need to do to prepare for this move of apps to the cloud from the perspective of network connections and security?
Hilton: When considering the move from on-premise to cloud, that’s a great time to consider your connectivity arrangement and the idea of business continuity for communications. Also, whichever cloud provider you go with, you need to be confident that the solution has redundancy and security built in. If you have a technology partner that you currently work with, it’s good to talk to that person and get his or her take on it to get some insight into the choices out there.
Are there some apps SMEs purposely won't place in the cloud?
Hilton: I’ve met some that don’t even want their email or Web hosting in the cloud. I think a lot of it goes down to the personality traits of the owner. I can’t think of a particular app that should never be put in the cloud if you’re a small business, even in the healthcare profession, where there are a lot of regulation and compliance issues. If you are in a highly regulated industry, you should understand that if you put that kind of stuff in the cloud, the provider that you go with is going to have to have that level of accreditation that’s required for those guidelines.
How will the implementation of these trends affect SME employees and their roles?
Hilton: I like to think that it’s going to become easier to work from wherever you are and to balance home and business life because of mobile apps and cloud. Especially in the developed countries where the requirements are pretty high, I think that will help with some of the ways we collaborate. Hopefully this collaboration provides us more innovation, ways to change and improve and offer new services.
What kinds of challenges will a move toward the cloud pose?
Hilton: Any time you make a technology change, you risk immediate productivity losses, as your employees are getting used to something new. It requires some time, which is why it’s important to set up standard change management best practices and training.
If you’re a business owner and you’re used to having everything on-premise, and now it’s in the cloud, when something goes wrong, you probably kick yourself and think, ‘what a fool I was.’ I think you just have to step back and say, ‘when things are on-premise, they go wrong also.’ It’s just that the process for getting something fixed or improved is going to be different. I think that’s learning on the part of whoever is in charge.
What SME technologies are on your radar for your next report?
Hilton: One thing we are focusing on is the machine-to-machine (M2M) communications—
smart metering, connected cars, etc. I think the first will be in fleet services—large fleets of trucks that can all be tracked with wireless modules placed in them. Those types of solutions are really best for large fleets, but I think we are going to start seeing it roll out to fleets of ten trucks, which is in the domain of a SME.
Mobile applications will still be in there too, as we are right at the beginning of that. Video-based communication for SMEs is really cool, and I hope that takes off as well. I just don’t know if it will be next year, but we’ll see.
For more information on this report, please contact Steve.Hilton@analysysmason.com.