Cloud, analytics, CRM hot ticket items for Canadian SMBs: IBM

As companies regain spending confidence, cloud computing technology, customer relations management (CRM) products and analytics tools are fast becoming hot ticket items for Canadian businesses, according to a recent survey released by IBM.

The survey commissioned by IBM, Inside the Midmarket: A 2011 Perspective, was carried out by KS&R Inc. and involved 2,112 mid-sized companies from 22 countries and operating in various industries. Although the poll focused on firms with 100 to 1,000 employees, the findings were indicative of trends covering the small and medium sized business (SMB) market in Canada as well, according to Lean MacMillan, the Ottawa-based director of marketing strategy for IBM Canada. The survey results could be useful in identifying opportunities for companies engaged in developing business-to-business IT products and services.

MacMillan said, no less than 53 per cent of mid-sized firms in North America expect to bump up their IT budgets over the next 12 to 18 months. About 31 per cent of respondents said their IT budgets will remain unchanged and 16 per cent thing their budgets will decrease.

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Security items remain top at the top of the “must buy” list of 63 per cent of businesses polled.  “Protection of company and client data as well as ensuring continuity of service and operation remains a top priority for businesses in every segment worldwide,” said MacMillan.

But respondents also named CRM tools (62 per cent) and analytics tools (59 per cent) as their “most critical IT priorities” while 66 per cent of mid-sized businesses have either implemented or planned to undertake cloud computing projects.

Key drivers of IT spending

IT decision makers queried by KS&R Inc. revealed three key drivers to technology purchases for 2011:

  • Cost reduction and improved efficiencies (76 per cent)
  • Customer focus and service (73 per cent)
  • Increased business insight and intelligence (62 per cent)

Cloud computing is perhaps one of the hottest technology areas to play in right now and it’s probably no surprise to anyone either, according to Paul Edwards, director for SMB and channel strategies at Toronto-based IDC Canada.

Edwards said the small business market is the fastest growing area to adopt cloud-based computing solutions right now.

“From a small business perspective, companies are looking at cloud-based offerings because these companies don’t have the IT staff that a medium-sized business would have,” IDC’s Edwards said. “They also may not have the available capital to spend on on-premise solutions so with a cloud computing solution, they can pay monthly.”

“SMBs look to cloud computing solutions because they want enterprise-class reliability and security, which is something they usually can’t afford on their own,” said Bryan Rusche, cloud services product manager at Microsoft Canada. “With a cloud offering, the purchase cycle is predictable and it’s an easier cost to manage because it’s charged on a monthly basis. Cloud solutions are also a lot less expensive for an SMB.”

“The realization that analytics, CRM and cloud computing technologies are critical in solving these challenges has certainly gone mainstream and trickled down from the large enterprise space,” MacMillan of IBM said.

For instance, she said, the use of analytics in the midmarket space was traditionally IT driven. “But today more and more companies in this space are using analytics to help them leverage customer information to identify business opportunities and learn new ways to reach their customers.”

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In the past five years, IBM has invested more than $14 billion in strategic acquisitions to build up its analytics portfolio. One of its recent acquisitions involved the $1.7 billion purchase of Netezza, a company that focuses on low-cost simple to use analytics tools ideal for SMBs.

“Analytic tools help companies determine what products their customers are buying, what type of customers they have and where can they be found. CRM tools also help businesses determine how best to serve these customers,” said MacMillan.

To this end, she said, many SMBs are also interested in social media analytics. “Because almost everyone now has a social media presence, businesses want to know what their customers or other people are saying about them or their company. Businesses that provide this tool or service will be more in demand as the year progresses.”

With the focus on cutting cost and improving efficiency, businesses are also turning their attention to cloud computing options. Many companies view cloud computing technologies as a cost saving means to achieve lower cost collaboration and an email functions.

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MacMillan said IBM’s LotusLive for example delivers email, Web conferencing, social networking, calendar functions and collaboration services for just $3/user/month. The company’s cloud-based Information Protection Service data backup offering provides online backup products for as little as $2.95/month.

Post recession buying

The upward swing in SMB post recession IT spending has been noted by research firm Gartner Inc. The company said worldwide IT purchases by SMBs grew by 5.3 per cent to $823 billion in 2010 and Garter expects spending to reach $1 trillion by 2014.

While IT resources have become more constrained than ever, the scope of IT projects has become “narrow and tactical,” according to Jim Browning, vice president and research director, SMB research, Gartner.

He said this “new economic discipline” for evaluation IT solutions stipulates that IT purchases should have a direct relations to cost savings; reduce total cost of ownership and have a shorter return of investment. “Moving forward short term return of investment is going to be critical as businesses seek to reduce cost and concentrate on shorter ROI.”

The survey commissioned by IBM also provided the following data that could be useful for IT service and product providers:

  • 40 per cent cited infrastructure improvement and virtualization among top budget priorities
  • 20 per cent cited regulatory compliance, security and CRM among top budget priorities
  • In mature markets (for example Canada and U.S.) 59 per cent identified cost as key barrier to achieving their IT priorities
  • Demonstrating return of investment was a key barrier to achieving IT priorities in China (60 per cent) and Korea (50 per cent)

The top 10 IT projects for 2011 were:

  • IT infrastructure improves
  • Collaboration
  • Business intelligence/ analytics
  • Business performance management
  • Information management
  • Unified communication/mobility
  • Virtualization
  • Cloud computing
  • Software as a service
  • Customer relationship management

While strategic focus was on efficiency and cost control just two year ago, one IBM partner said there is now shift towards concentrating on customers, growth and innovation.

“We’ve seen a boom in the number of midsize customers within the consumer products space who want to engage with us around analytics and cloud,” according to Jay Hakami, president and CEO of Sky IT Group, a technology solution provider based in New York. “Companies are looking to quickly identify tools and efficient ways to support growth and innovation,” he said.

(With notes from Maxine Cheung – CDN)

Nestor is a Senior Writer at ITBUsiness.ca. Follow him on Twitter, read his blogs on ITBusiness.ca Blogs and join the ITBusiness.ca Facebook Page.

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