SMB Experts predict: IT will thrive in 2005

2004 was a big year for small to medium-sized business IT, with more offerings from big vendors specifically geared for SMBs, to more SMB-related regulations and services. We asked our experts to tell us what 2005 will bring.

2004 was a big year for small to medium-sized business IT, with more offerings from big vendors specifically geared for SMBs, to more SMB-related regulations and services. We asked our experts to tell us what 2005 will bring.


Ed Tittel, LANWrights Inc.
Network skills, certification and troubleshooting

Doing more with less: If there's any trend in IT technology that never goes out of style for SMBs, no matter what year it is - or which New Year is in the offing - it's the grand tradition of doing more with less. That's why server packages and appliances that do more than one thing, and sometimes a surprising number of things, should continue to be big in 2005.

In this category I'd put Internet connection devices (which typically combine broadband links, a 4-port or bigger switch, router, firewall, NAT and DHCP servers and sometimes even VoIP inputs/outputs in a single box), server bundles (like Microsoft's Small Business Server) and similar offerings into this category, and predict that 2005 will see them used even more than they were in 2004.

Security: On other fronts, I expect managed security for SMBs (including perimeter security, updates, regular audits plus e-mail and traveling laptop/notebook coverage) to continue as a booming market in 2005. Look for spyware/advware consciousness, protection and solutions to proliferate as well, now that many SMBs have their firewalls and anti-virus coverage already in hand.

Web-based services: Finally, I predict an increase in the production and use of Web-based services to help SMBs conduct business themselves, and service their customers, to become an increasingly important technology component in their inner workings - with all the attendant activity and occasional headaches this usually means for IT. It should be a busy year, filled with new technologies and innovations; let's also hope it's a prosperous year as well!

Ed Tittel is a principal at LANWrights Inc., a network-oriented writing, training and consulting firm based in Austin, Texas. He is the originator of the Exam Cram series and has worked on over 70 certification-related books on Microsoft, Novell, CompTIA, information security and other topics.

Tom Pisello, Alinean
ROI and IT investments

SMBs will have the flexibility to innovate with IT spending. At large companies, 90% of the IT budget keeps the lights on – covering existing infrastructures and their support personnel. This leaves scarce room for innovative investments that deliver competitive advantage. SMBs will find that they have fewer legacy systems to support and on-going IT commitments – hardware and staff – freeing a larger percentage of the budget to target innovative, scalable investments that will fuel company growth.

2004 IT "taxes" will continue to consume growing IT budgets. While IT budgets are expected to rise an estimated 5% to 8% for the second straight year, much of the increase will go toward three initiatives:

  1. Sarbanes-Oxley: Section 404 compliance deadlines stretch into July 2005, ensuring it will consume part of the IT budget for months – and that's if companies meet the deadline. Audited companies will devote significant resources to avoid fines and penalties. And while some productivity gains will naturally result, this legislation will continue to siphon money away from higher-value projects.

  2. Security: The growth of cyber attacks – worms, viruses, hacker attempts, phishing, adware and spyware – requires SMBs to invest in new technologies and intelligence, costing up to hundreds of thousands of dollars for most businesses. Many of these remedies address inherent software flaws and fail to deliver any bottom-line business value, only to reduce the risk of infrastructure investments – a necessary evil of technology.

  3. PC upgrades: Many companies have extended the lifecycle on PCs from 36 to 48 months. Aging year 2000 PCs mean that its time to perform more aggressive upgrade cycles if not a wholesale replacement (bulldozer) of existing PCs. There is a solid ROI for these upgrades, particularly if organizations take advantage of new mobile/wireless solutions, but the upgrades will still consume valuable budgets.

Energy and health care will deliver the greatest business gains from IT spending. Aided by favorable economic conditions and rapid growth, energy and health care companies will continue to see the most bottom-line benefit from IT spending. These sectors on the whole extract the most value from technology, as their solutions scale for growth, manage new employees and company capabilities, and ensure federal compliance (such as with Health Insurance Portability and Accountability Act of 1996 (HIPAA)).

Tom Pisello has been helping companies get more business value from IT investments for 15 years. He is founder and CEO of Alinean, which specializes in software, methodologies and tools for evaluating, presenting and measuring the value of IT investments through the use of benchmarking and ROI analysis.

Randy Kerns, Evaluator Group

Storage Choices: There will be more choices for storage systems from the SMB market - especially from vendors that are typically associated with storage in the higher end market.

There will be additional storage devices from IBM, EMC, Sun, Hitachi and StorageTek, as well other suppliers. These choices will include storage network solutions for consolidation that based on fibre channel with more simplified management and installation that is at even more competitive pricing. Most of these FC-based storage systems will include embedded switches for connectivity.

There will also be more iSCSI storage solutions that can be used for applications that require block storage. The pricing competition will be fierce with many vendors - not all of whom will be able to withstand the pricing pressure. Additionally NAS devices will continue to improve in functionality and performance.

Data Protection: Another focus item for IT in the SMB market will be solutions for remote replication. Due to business requirements, remote replication will be a major effort for many businesses in the higher end of this market. Solutions that handle the replication as part of the storage system or software that runs on the server will be more widely deployed.

Confusion: Marketing messages and the overwhelming number of possible solutions will make the confusion about storage solutions choices even worse. Most IT people in this market don't have the time to become subject matter experts but they are barraged with new technologies and new products that make clear-cut decisions very difficult.

As a senior partner with Evaluator Group, Randy Kerns' main areas of expertise include storage networking, storage technologies, industry trends and futures, an advanced education line of business, and company and product strategies.

Michael Gregg, Superior Solutions Inc.
Network security

Security and compliance: SMBs will continue to focus more attention on security technologies as consumers become more aware of identity theft and privacy issues. Expect the government to pass more legislation in this area.

Wireless technology: Improvements in wireless technologies should lower prices and make it a more attractive option for expanding businesses.

Open source: More SMBs will make the move to open source technologies. While next year will not be like the boom years of the 90's, it should offer an improved business climate.

Michael Gregg has more than 15 years experience in the IT field. Michael is the President of Superior Solutions Inc., a Houston-based training and consulting firm. He is an expert on networking, security and Internet technologies.

Jeff Kaplan, THINKstrategies

Services, Services, Services: SMB interest and demand for managed application, network, security, storage, hosting and other services will dramatically increase as a greater proportion of SMBs seek to offload, or 'out-task', various aspects of their IT/telecom requirements.

As a consequence, an expanding array of vendors, carriers, resellers, integrators and specialized service providers (xSPs) will enter the managed services market, creating confusion and price competition.

There will be an increase in mergers and acquisitions among xSPs that will reduce the number of players but could also disrupt the quality of service provided.

Utility Computing: The growing variety of managed services will represent the first generation of utility computing solutions for SMBs.

Ironically, the two leading vendors in the utility computing market, IBM and HP, will have difficulty delivering on-demand services to SMBs, and will need to use a channel strategy to sell and deliver these services.

Security, VoIP, and Security will continue to be the #1 technology concern of SMBs who will increasingly rely upon managed security services to satisfy their needs.

Voice over Internet Protocol (VoIP) will gain mainstream acceptance among SMBs. However, only a small proportion of SMBs will swap out their current phone systems for VoIP alternatives because of hesitancy to disrupt existing operations. will become the preferred CRM solution of SMBs because of its ease of implementation and administer.

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.

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