SMBs Set To Disrupt The IT Industry… And About Time Too!

SMBs Disrupt IT

Sometimes life changing moments happen in a flash. In business however we often see, after the event, that these things had crept up on us; over-inflated valuations, unsustainable lending or on the more positive end of the scale, new visions, products and technologies that usher in a new era.

The signs suggest we’re in such a phase now. I’d go as far as to say that those of us who work in the information technology industry will look back at our world as it is now and say ‘how did we ever work like that?’

A Moment Of Change For IT

The obvious suspects for this change are cloud computing, the ‘consumerisation of enterprise IT’ and ‘bring your own whatever you fancy’. Indeed these phenomena have had a pleasingly disruptive impact on what can, ironically, be a rather stuffy industry. But I’m thinking of something more grass roots.

I believe that the way the majority of businesses buy, deploy, manage and use software and infrastructure systems is going to change – significantly.

Perhaps as a prediction it lacks the glamour of the likes of ‘the internet of things’. However for the estimated 500,000 businesses set up in the UK in 2013 alone (and multiply this year-on-year, globally) it could spell a whole new future in terms of the value IT brings as they fight for survival and growth.

To get some sort of gauge on this building momentum, my company undertook a study of 200 senior IT personnel in SMBs, conducted by leading market research specialist Vanson Bourne. The findings make pretty interesting reading…

A New Era Of Hungry SMBs

Many see SMBs as the keystone in financial recovery for the UK. And yet too-frequently they’re treated as the minor player in our industry. They’re the recipients of enterprise cast-offs, services and products chopped down to fit just inside the SMB’s budget – stretching it just short of breaking point. And it really shows.

Amongst respondents in our study, just one third (33 per cent) were able to boast they have supported the growth of the business during the recent economic upturn. Despite the economy seeming a little brighter, only 38 per cent say that their IT delivers any sort of competitive advantage. Why is this?

Half of these firms (48 per cent) say their budget simply isn’t enough for them to really add to the growth story. They’re too busy keeping the lights on and paying the bills. The majority (57 per cent) stated that they could do more for the business of they had access to more resources. In real terms that means members of the IT team adding value to the business through technology and IT strategy. I’d wager that the number would be hire if the rest had felt empowered enough to think more deeply about what they could be doing with technology.

Doing Things Differently

IT professionals making ‘safe’ choices with big brand technologies have often climbed the corporate ladder, but as these solutions cease to deliver competitive advantage or start costing too much, such choices will no longer be deemed safe. SMBs, having little room for error when it comes to spending their budget, are characteristically astute.

Almost all (99 per cent) surveyed companies agree to some extent that large organisations have a reputation for buying big name brands, and that IT decision-makers believe they will become more employable if they do so (60 per cent agreed entirely with this). The SMBs instead identify alternative routes to success; three quarters (74%) stated their ideal IT environment would not be built on traditional licence-based products.

SMBs Are Going Their Own Way

The study revealed that almost ten out of ten (97 per cent) respondents agree to some extent that mid-market users can’t get a competitive edge from licence-based software and systems, which adds some weight to these concerns. This has lead 79 per cent to explore open source and licence-free software and infrastructure options in the last 12 months alone.

Today almost one third (31 per cent) of SMB applications are already non licence-based offerings. What’s particularly interesting is that this has almost doubled, having been less than one in six (16 per cent), since 2005. The survey panel indicated that the number will be more like 36 percent next year. The trajectory for these types of solutions is upward. I find this very telling, and think it paints a fascinating picture for the future.

However the surveyed SMBs and their hundreds of thousands of peers survive the UK’s emergence from these hard economic years, I’m convinced their experience will force the IT industry to become a more diverse and dynamic sector.

Jeff Ready

CEO and co-founder of Scale Computing, Jeff Ready defines a serial entrepreneur – starting his first company at just 11. Jeff has not only proven himself as a pack leader but as a negotiator, fundraiser, technologist, marketer and trusted advisor, having started numerous companies and raising over $50 million in investment capital. Prior to founding Scale, Jeff was co-founder and CEO of Corvigo, a Linux-based anti-spam appliance, where he oversaw the company from startup through funding to acquisition. After the acquisition, Jeff served as VP of Marketing at Tumbleweed Communications. Prior to Corvigo, Jeff was co-founder, COO and VP of Marketing at Radiate. Jeff holds a degree in Computer Science from Rose-Hulman Institute of Technology.