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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

We are tech companies and tech means cloud which means new business models

We believe that we are all tech companies. Obviously companies like Dell with hardware or Microsoft with software or Cisco with networking products or IBM with services or Salesforce with cloud software or even Apple with consumer electronics are recognized as tech companies that are relevant to the businesses that operate around the world. But this is not the extent of the tech industry.

We may or may not recognize financial institutions as being technology companies but the financial institutions themselves recognize that technology shapes their competitive environment. A recent memo from a senior executive at one of those financial institutions identified not their traditional competitors but Apple Pay as a significant source of future competition.

Automotive industry companies like GM, Ford, and Mercedes are also technology companies. We all recognize Tesla as a technology company because in essence its product is technology with electronics and electric engines. In the 1970s, metal was the single highest value component of a vehicle. In the 80s and 90s, computer hardware became the most valuable component of a vehicle, and today software is the highest value component in a new vehicle. A new vehicle purchased today contains often as much as 100 million lines of software code. For comparison's sake, the Android operating system contains about 15 million lines and Facebook has about 62 million lines of code. So a late model car is equivalent from a coding perspective to Facebook plus Android plus Android again plus a little bit more Android.

The taxi industry, represented by cabs in New York City and Toronto and Mexico City and a tuk tuk from Thailand, has been greatly disrupted by Uber which owns no cars but provides ride services around the world.

This huge opportunity for the creation of new wealth by disrupting existing industries with technology is driving quite a lot of tech innovation throughout the economy. As analyst David Moschella observed in a post entitled 'Dual Disruptions', a firm can be seen by the technology industry either as a valued customer or potential lunch for this Uberfication style of disruption.

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IT security framework for SMBs

SMBs are not only increasingly dependent on IT – they are dependent on increasingly-interconnected systems, which are in turn open to an ever-expanding population of devices and access points. The volumes and value of data contained in these systems continues to grow, which both increases the potential damage associated with a breach, and attracts heightened attention from hackers. Techaisle’s SMB survey data finds a disconnect between security policy and security practice that creates the potential for poorly-coordinated approaches to security – an uncertainty that is magnified by shadow IT.

In Techaisle’s latest survey of SMBs, only 13% said that they were fully prepared and confident to handle security challenges, especially mobility security. The remaining 87% were partially prepared, unprepared or unsure. These are very sobering statistics.

Techaisle’s SMB Shadow IT survey data shows that over 70 percent of applications and nearly 60 percent of IT infrastructure related spend and decision authority lies outside of IT. These expenditures are made without the IT department’s approval, guidance, or in some cases, even without IT’s knowledge. 

Security is becoming a more critical component of business rather than IT strategy.

SMB IT security managers should petition for senior executive support which will help to build an approach that safeguards the organizations, users and data, in a framework that is flexible enough to respond to emerging opportunities and threats.

SMB Mobility increases threat perimeter

The problem with mobility (like cloud) is that it changes the concept of “perimeter.” Intruders don’t need to batter through closely-guarded walls to gain access to the interior of the network; they can ride through a permeable configuration on the backs of mobile devices that have been granted access to the precious applications and data that live in the interior of the organization. It is as if the castle walls and drawbridge were replaced by windows and breezeways offering access to visitors arriving from all directions.

With mobility, the SMB user community becomes a ubiquitous and shifting source of portals through the perimeter. As a result, IT doesn’t need to only defend against recognized foes: it needs to protect the corporation from breaches that can result from the actions of its own workers, and needs to protect the same data that it delivers as an essential component of support for the mobile workforce – the workforce that is viewed by senior management as making compelling contributions to the top and bottom-line success of the business.

SMBs should consider a four-layer security framework model for deployment:

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2015 WW SMB IT spend nearing US$600B

Techaisle forecasts that global SMB IT spend could very well reach US$597 billion in 2015 which is an average of US$700 per full-time employee and slightly over US$8K per SMB business. Corresponding US SMB IT spend will most likely be US$180 billion in 2015. Techaisle defines SMBs with 1-999 employees.

At worldwide level, 42% of SMB employees will be mobile by end 2015. US will have the highest percent of SMB mobile employees at 53% and Asia/Pacific excluding Japan will be at 45%.

Going back a year, the 2014 combined cloud and managed services spend by US SMBs was US$48 billion representing 27% of total US SMB IT spend.

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techaisle-us-smb-new-technology-it-spend-2014-resized

The global small and mid-market businesses, SMB (1-999 employee size) market has been the growth engine for the IT industry at large. The reason is quite simply that SMBs account for over 80 percent of businesses in any country – developed or developing. And over the last few years there has been an ongoing change in SMB IT priorities – Techaisle calls this as “Value Shift”. It signals the change in priorities from Enablement to Empowerment and refers to the new priorities among SMBs to invest in tools and technologies that allow their employees to make better business decisions, improve market reaction time and better serve their customers. In other words, SMB business executives are looking to improve return on Human Capital as a way forward.

No doubt the trend is towards increased spending on cloud and mobility but there are some other key spending trends to note:

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