2024 Top 10 SMB and Midmarket Predictions

In 2021, we predicted that AI would permeate small and medium-sized businesses (SMBs) and midmarket firms, not as an independent solution but as an integral feature within other products. As SMBs fully comprehend the inherent nature of AI, they will increasingly seek AI-powered solutions to prescribe actions that mitigate risks and enhance decision-making, business agility, and innovation proactively.

We also predicted that AI technology would evolve so rapidly that by the time SMBs become comfortable with data-driven decision-making, AI would be executing decisions that might be beyond the comprehension of business executives. The challenge with AI would shift from trusting data over intuition to trusting AI when insights into its decision-making process are not readily available in the cloud applications used by SMBs and midmarket firms. We expect this trend to continue into 2024.

After surveying over 3000 SMBs and midmarket firms, Techaisle has announced its top 10 SMB and midmarket predictions for 2024. There is intense market pressure on SMB and midmarket executives to deliver tangible progress towards – and benefits from – application innovation and digital business. At least some of this results from a worldwide fascination with Generative AI and its anticipated potential to transform nearly any function it might apply to. Gen-AI offers significant potential for SMBs and midmarket firms to enhance their operations and drive innovation. By leveraging this technology effectively, these businesses can improve efficiency, productivity, and customer satisfaction.

In 2024, SMBs and Midmarket business and technology leaders will maintain a practical perspective as they move into the digital future powered by AI. SMBs will invest in AI-infused, AI-embedded, tailor-made technology solutions to streamline operations and expand their customer base. To improve manageability, reduce complexity, and limit sprawl, 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 in AI solutions that deliver tangible benefits within their environment. SMBs will adjust their own pricing strategies and implement cost-control measures. Labor shortages will prompt them to invest in employee training and retention initiatives to ensure smooth operations and efficiency. Additionally, SMBs will opt for proactive supply chain management and diversification strategies to minimize disruptions and exploit growth opportunities.

Here are Techaisle’s top 10 SMB and Midmarket predictions for 2024.

1. XaaS Power Play: Outcome-Driven Models and Shared Risk Partnerships

The adoption of "Anything-as-a-Service" (XaaS) is projected to surge, marking a significant shift from product-centric to service-centric technology acquisition by SMBs and Midmarket firms. XaaS offers immediate cost savings, operational efficiency, and scalability, making it particularly attractive to SMBs. It also provides a transition path from traditional fee-for-product structures to outcome-based models, shared risk agreements, and contracts tied to defined business goals. To fully leverage these benefits, though, SMBs will need support structuring fair and binding agreements with suppliers and help to navigate challenges such as data security concerns, over-reliance on single providers, and complexities associated with integrating XaaS models.

2. Cost-Effective Gen AI Deployment: Leveraging AI-as-a-Service (AIaaS)

Generative AI (Gen AI) will hold transformative potential for SMBs, promising to fuel growth, innovation, productivity, and profitability. Driven by the fear of falling behind in a tech-driven competitive landscape, SMBs are poised to become early adopters (faster than enterprise firms). However, the high costs of implementation will present a significant barrier. To navigate this challenge, SMBs will require a flexible adoption strategy. Internally, the key will be to increase the capacity for change within the organization. Externally, SMBs will look to leverage open-source and free large language models alongside "AI-as-a-service" platforms to obtain cost-effective access to Gen AI's capabilities. On the supply side, this shift will further increase cloud consumption within the SMB segment. AI-infused, AI-embedded business applications will gain traction among SMBs, while end-to-end platforms will challenge the dominance of best-of-breed solutions.

3. AI PC Refresh Cycle: Unleashing Productivity, Security, and IT Efficiency

SMBs will increase their PC expenditures, focusing on AI PCs and driving a PC refresh cycle (faster than enterprise firms). The three primary drivers for AI PC refresh will be improvements in user productivity, threat detection and prevention at the device level, and improved IT support efficiency. The PC is where work gets done and is the essential SMB productivity device. These AI PCs will optimize resource utilization for SMBs, delivering intelligent and personalized PC experiences through on-device, finely-tuned AI models. AI PCs will also utilize machine learning to detect anomalies in user behavior, providing faster processing and enhanced task performance. Initial users of AI PCs will be the C-Suite, creators/designers, sales, and IT support.

4. Bridging the Gap: NextGen Cloud Strategies in a Time of Transformation

SMBs have made significant strides in adopting the cloud to drive efficiency. Leading SMBs will invest in next-generation approaches like marketplaces, containers, and CI/CD pipeline management to further leverage cloud resources for business needs. “NextGen” is a future state in which the cloud enables the business to react to opportunities and emerging requirements, narrowing the gap between strategy and execution. SMBs will follow a three-step process to achieve this: adoption and consolidation of and around NextGen solutions, a focus on driving efficiency (including related financial controls) from these tools, and corporate-wide commitment to the NextGen future state. Mainstream SMBs will progress beyond efficiency to agility as a critical objective. The next wave of cloud applications will further blur the line between IT and business infrastructure.

5. Consolidate, Analyze, Respond: The Rise of Unified Platforms for Cybersecurity

Cyber Resiliency by Design will be the norm, with SMBs moving from fragmented collections of tools to unified platforms that break down silos to deliver more robust SMB security. SMB and Midmarket firms will benefit from these “best of group” solutions, addressing cybersecurity challenges through a platform that facilitates faster and more proactive vulnerability and threat identification, analysis, and response. By consolidating traditional security solutions and those that focus on individual components such as user and entity behavior analytics (UEBA), EDR, NDR, and security orchestration, automation, and response (SOAR), unified platforms will aim to eliminate the fragmentation that has complicated security operations for SMBs and Midmarket firms. Zero Trust will rapidly become a vital strategy as it continuously validates users' (human and non-human) requests and interactions. Zero trust will be well suited to SMB’s business environment, where cloud-based resources, a mobile workforce, and systems available to customers, partners, and other stakeholders render the notion of a “perimeter” obsolete.

6. Agility, Security, Cost-Effectiveness: Mastering the Cloud with Managed Services

SMBs will increase their use of managed cloud services by exploring strategic pathways to increased agility, security, and cost-effectiveness in businesses/IT infrastructure. Hybrid resourcing is and will continue to be the norm. SMBs already rely on external suppliers to provide skilled resources in many different IT areas. As demand for cloud-based support sprawls across business operations and needed skills become scarcer and more specialized, SMB IT managers will build resourcing strategies that fully integrate ongoing supplier relationships.

7. Midmarket's Modernization Mania: Cloud Economics - The Consulting Secret Weapon

There will be high interest in application modernization, coupled with demand for consulting services targeted at this requirement. Midmarket firms will aim to conquer cloud costs and drive value in application modernization. The tension between established assets and processes and advanced alternatives will bedevil many midmarket organizations as they move to modernize applications, underscoring the value that services firms will obtain from having application modernization as a portfolio offering. Understanding cloud economics will be a significant modernization challenge for SMBs and a considerable business advantage source for those who build or buy this capability. Cloud cost optimization and economic management will become the most sought-after cloud consulting service; SMB buyers should push existing partners and their vendors to offer transparent cost insights and add value by establishing cost optimization, compliance, and risk mitigation processes.

8. Lo-Code, No-Code 2.0: The Comeback Fueled by Developer Scarcity and Smart Choices

No Developers, No Problem? Lo-code/No-code will take center stage in the SMB talent crunch; these tools are poised for strong growth in adoption. In the past, concerns such as support discontinuation and potential limitations in the applications developed using these tools compared to those created through traditional coding methodologies led to a previous dip in interest. However, lo-code/no-code tools are expected to rebound as SMBs grapple with a critical challenge – finding, employing, and retaining skilled IT developers. To facilitate better adoption in this next iteration, SMBs are expected to take a more proactive approach and exercise greater caution in integrating these tools, addressing concerns, and ensuring a more strategic implementation.

9. Beyond the Hype: Edge & 5G Power the Leap into the Digital Future

The convergence of Edge computing and 5G, with its dramatic improvements in mobile network latency and speed, holds immense potential for all businesses, including SMBs. By enabling faster and more efficient data processing, edge and 5G empower real-time analytics and unlock a new level of decision-making agility. However, while widespread 5G adoption is anticipated, budget constraints may pose a challenge for SMBs. Nevertheless, the transformative potential of 5G for workforce and customer engagement cannot be ignored – mainly if larger competitors are reaping the fruits of investments in this area. SMBs who need to harness the power of automation, AI, machine learning, virtualization, and cloud technologies to compete and thrive will need to understand and invest in 5G and Edge. In particular, the edge will become their canvas for lightweight real-time AI and ML applications as they will increase the extent to which cloud infrastructure supports business workflows.

10. CX Revolution: Unleashing the Power of Personalization with Integrated Technologies and AI

By segmenting customers, customizing marketing efforts, and utilizing predictive analytics, SMBs will tailor their strategies to meet individual customer needs. This involves investing in data collection platforms, digital customer experience analytics, and related technologies. As SMBs actively seek ways to improve customer engagement, their demand for integrated CRM, UCaaS, and CCaaS solutions will increase. This demand is expected to grow further due to integrating artificial intelligence (AI) and analytics into the solution, improving capabilities such as managing customer interactions, tracking leads, and maintaining customer information. Businesses are already shifting staff investments from sales and marketing to customer service organizations; investments in the technology stack will mirror this migration.

11. Beyond Profit/Unlocking Opportunity: The Rise of the Eco-Conscious in a Greener Economy

The effects of climate change and environmental issues are becoming more apparent. Driven by both regulations and customer (and investor) demand, SMBs will be compelled to adopt greener and circular practices and strategies. Customers will drive the most immediate requirements. As consumers increasingly favor socially and environmentally responsible businesses, SMBs will invest in new approaches to sustainability, such as using recycled and biodegradable materials, deploying energy-efficient hardware, and prioritizing suppliers committed to sustainable practices. With the growing importance of sustainability, SMBs will realize the potential to enhance brand reputation, support Scope 3 reporting requirements, and build differentiated customer relationships, moving with broader trends towards a more sustainable future.

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