2019 SMB Technology Trends: A Mid-Year Review

2019 SMB Technology Trends: A Mid-Year Review

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Business and technology publications that cover the SMB market have a habit of predicting trends at the start of every year. SMB Group’s “Top 10 SMB Technology Trends of 2019” report, which was sponsored by Oracle and published in January, stood out as a particularly comprehensive review for this year.

Now that 2019 has passed its halfway point, how are those predictions holding up? Below, we’ll compare the key findings of the SMB Group report to news and studies that were released more recently.

  1. The Cloud Is Becoming More Popular Than On-Premises Solutions

The SMB Group report shed some light on just how ubiquitous the cloud has become. It found that SMBs are now more likely to use cloud-only or hybrid cloud solutions than on-premises solutions for a majority of business applications.

Specifically, cloud-only or hybrid cloud solutions are more frequently deployed than on-premises solutions for business intelligence, marketing automation, sales management, customer service automation, and corporate performance management applications. However, on-premises solutions are still preferred for enterprise resource planning, human resources, payroll, and accounting applications.

Mid-Year Checkpoint: While SMBs have flocked to the cloud, they do still have some concerns. In June, IS Decisions published a survey of 300 IT security specialists employed at SMBs. 61% of those surveyed believe that their data is unsafe in the cloud. This explains why on-premises solutions continue to be favored for business applications that involve sensitive financial and personal information.

The first step to the cloud for SMBs continues to be Disaster Recovery. Veeam, a cloud data management leader, reported at VeeamON 2019 exceeding $1B in annual bookings for the first time demonstrating the advancement of organizations of all sizes moving their backup and recovery environments to the cloud. In addition, Microsoft’s announcement of end of support on Exchange 2016 is accelerating SMBs move to o365.

  1. Cybersecurity Threats Are On The Rise

If businesses are worried about cybersecurity threats, they’re not being irrational. According to the SMB Group report, cyberattacks targeting SMBs are indeed becoming more frequent.

The Ponemon Institute is one of the leading authorities on cybersecurity research. Their "2017 State of Cybersecurity in Small & Medium Size Businesses" report found that the share of SMBs that experienced a cyberattack rose from 55% in 2016 to 61% in 2017. And the "2018 State of Cybersecurity in Small & Medium Size Businesses" report found that last year, 67% of SMBs were attacked. In other words, the relatively short span of 2016 to 2018 saw SMB cyberattacks rise by an astonishing rate of 22%.

It’s easy to see why this is happening. More and more SMBs are taking advantage of the cloud, mobile devices, the internet of things, and other technologies that improve productivity. But all these extra connections to the internet give attackers more opportunities to exploit vulnerabilities and steal information.

Mid-Year Checkpoint: When it comes to cybersecurity concerns, 2019 is shaping up to be no different than 2018 or 2017. In Spring 2019, Symantec interviewed over 1,000 IT security leaders for their inaugural Cloud Security Threat Report (CSTR), and the results were just as alarming as what was found by the Ponemon Institute. The most striking stat from the CSTR is that more than two-thirds of respondents had seen direct or likely evidence that data they’d stored on the cloud had been stolen and put up for sale on the dark web.

  1. SMBs Are Relying More On Telecommuters, Freelancers and Contractors

The SMB Group report also found that 39% of SMBs expect to hire more freelancers and contractors in 2019, and 28% expect that more of their workforce will start telecommuting at least one day per week.

This trend has affected businesses both big and small. Baby boomers are retiring, and the younger workers that are taking their place tend to prefer a more flexible environment. This arrangement is a bonus to businesses, too. In most cases, budgets are tight and profit margins are slim for SMBs. Telecommuting allows SMBs to save on the overhead that comes with a physical workspace, and hiring freelancers rather than full-on employees eliminates the cost of the payroll tax and employee benefits.

Mid-Year Checkpoint: Freelancing platforms appear to have recognized the appeal of their service to SMBs, as they’ve started offering plans specifically designed for this market. Upwork, the world’s largest freelancing platform, unveiled its Upwork Plus subscription tier in March 2019. At $49.99/month, this plan is one-tenth of the cost of Upwork Business ($499.99/month is just too high a price for many SMBs), and it still includes premium features such as advanced reporting and 24/7 support.

When it comes to technology support, SMBs continue to lean on IT Managed Service providers (MSPs) versus hiring in house staff. As reported by CompTIA in their Tech Buying Trends Among Small & Medium-Size Businesses, roughly two thirds of SMBs state that technology is a primary factor in pursuing their business objectives. The survey reported that almost 85% of SMBs work with IT Managed Service providers to help them stay current, secure and competitive.

  1. SMBs Believe Artificial Intelligence And Machine Learning Will Make Them More Successful

Again, SMBs often struggle to stay in the black. They’re competing against enterprises with much more resources, and they need every technological advantage that they can get. So, it should be no surprise that 51% of the businesses surveyed by SMB Group believe that artificial intelligence (AI) and machine learning (ML), which promise to reduce the need for sheer manpower, are important for their business’s success.

Mid-Year Checkpoint: Where there’s demand, there will eventually be supply. Many entrepreneurs have recognized that AI and ML are regarded as the next big things in business technology, and they are swooping in to give SMBs what they want.

For example, the AI software startup Aider just beat out hundreds of other applicants for a spot in the Mastercard Smart Path program. “We believe in human-centric AI and created Aider to give small business owners easy access to the information they need to make better business decisions,” said Aider cofounder Pete Weaver.

Even if SMBs don’t utilize AI and ML directly, they can still benefit from it through the SMB-facing products and services that AI and ML make possible. In June, Shopify announced that it’s launching a dedicated fulfillment network, which will use ML to make order matching and inventory routing more efficient. This efficiency will allow Shopify to reduce their expenses, and these savings are passed on to SMBs in the form of lower costs for eCommerce services.

  1. Medium Businesses Aren’t Satisfied With Their HR Software

It’s important to remember that not all businesses that fall under the “SMB” umbrella are equal. A struggling sole proprietor working out of their garage and a thriving operation with multiple storefronts and dozens of employees could both be considered SMBs.

Small businesses and medium businesses have significantly different priorities. The SMB Group report found that medium businesses believe “attracting and retaining quality employees” and “improving employee productivity” are their top two priorities, while small businesses are more focused on attracting new customers and increasing revenue.

Medium businesses demand a lot from their HR management software, and many of them aren’t happy with what they’re getting. When asked if they were planning on replacing their current HR solution, 56% of medium businesses responded either “Yes” or “Maybe”, while 44% said “No”.

Mid-Year Checkpoint: This is yet another trend that appears to be progressing as predicted, considering all the major HR software industry shake-ups that have occurred in just the past couple months.

In June, Jobs.com and JazzHR announced a strategic partnership. “JazzHR’s goal is to continue to give SMBs the best possible recruiting and hiring experience we can provide, and our partnership with Job.com only strengthens this,” said JazzHR VP of Marketing Allie Kelly. Also in June, Paycor and DailyPay announced that they were working together.

When HR solutions aren’t partnering up with each other, they’re coming up with new features of their own to lure in new customers. PrismHR is already one of the top providers of HR solutions for SMBs, and they announced on June 18 that they had developed new reporting tools, an improved user interface, and more resources for customer support.

While established players in the HR software market are upping their game, venture capital is steadily flowing to startups looking to introduce new solutions. In the second quarter of 2019, the payroll service PayFit raised $79 million in funding, AI-powered hiring platform AllyO raised $45 million, talent platform provider Eightfold raised $28 million… you get the picture.

Clearly, HR software providers smell the blood in the water. They know that SMBs are looking for something more out of their HR management solution, and they’re working hard to fill that void.

  1. 5G Will Bring Faster Internet And New Capabilities

The SMB Group report referred to 5G as an emerging, potentially game-changing technology, and Business.com dedicated the first spot on its 2019 list of “Tech Trends for Small Businesses to Watch” to 5G.

5G will bring faster internet with lower latency to SMBs. That means video conferencing will no longer be disrupted by lag and poor image quality. Large files will be downloaded in seconds rather than minutes. And 5G will enable the business technology of the future, such as virtual reality training.

Mid-Year Checkpoint: 5G is going to have an enormous impact, but don’t expect it to be available everywhere in 2019. Here’s a quick update on the areas that currently have access to 5G:

  • Verizon: Houston, TX; Sacramento, CA; Indianapolis, IN; Los Angeles, CA; Chicago, IL; Minneapolis, MN; Providence, RI
  • AT&T: Houston, TX; Dallas, TX; (Lewisville, TX; Denton, TX; and Plano, TX coming soon); Atlanta, GA; Waco, TX; Charlotte, NC; Raleigh, NC; Oklahoma City, OK; Jacksonville, FL; Louisville, KY; New Orleans, LA; Indianapolis, IN; San Antonio, TX; Austin, TX; Los Angeles, CA; Nashville, TN; Orlando, FL; San Diego, CA; San Francisco, CA; San Jose, CA
  • T-Mobile: Atlanta, GA; Cleveland, OH; Dallas, TX; Las Vegas, NV; Los Angeles, CA; New York, NY (the T-Mobile 5G network can only be accessed through the Samsung Galaxy S10 5G)
  • Sprint: Atlanta, GA; Dallas, TX; Fort Worth, TX; Houston, TX; Kansas City, MO
  • Starry: Boston, MA; Denver, CO; Los Angeles, CA; New York, NY; Washington, DC

So, if your business is based in a major metropolitan area, you should be able to benefit from 5G right now. But depending on your location and ISP, you might need to wait for 2020 or even 2021.


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