Techaisle Blog

US SMB IT spend is forecast to grow by 7.6% in 2021 over 2020. In July 2020, we had written that resiliency, agility, and adaptability would accelerate recovery for SMBs. Techaisle's survey of 1720 US SMBs confirms the prognosis for the US market. Data shows that 45% of US SMBs will be in the high growth segment, with IT budget increases ranging between 7.5% to 15%. However, 12% of SMBs will experience budget decreases of more than 5%. The majority of the declining IT growth segment will be in the 1-49 employee sizes. Regardless, the small businesses will grow their IT spend. There is an apparent dichotomy appearing in how technology is likely to be acquired by SMBs. Nearly two-thirds of micro-businesses prefer acquisitions structured around leases, whereas one-fourth of midmarket firms plan to move to "as-a-service" approaches.

IT services spending will grow by 8.6%, driven by managed services, data/platform integration, cloud orchestration, and business process automation. As cloud applications increase, the demand for hybrid IT is becoming a pressing requirement for SMBs.

2021 will be the year of the midmarket segment, with IT spending forecast to grow by 8%. Data illustrates a fascinating picture showing IT budget increasing in direct proportion with size, from 100-249 to 500-999 employee firms. The upper midmarket (1000-4999 employee size segment) will have an average budget increase of 6.1%, slightly lower than the 500-999 size business.

New work patterns and the acceleration of distributed workplaces are resulting in a range of productivity benefits for SMBs today. As such, businesses see increased workforce efficiencies and talent recruitment while minimizing cost by reducing intermediaries and integrating contract professionals – and even improved environmental performance through reduced commuting and building footprints.

In the quest to deploy a perfect hybrid workplace technology infrastructure, SMBs often overlook networking – wireless, routers, firewalls, and beyond. Similarly, as small business retailers and other small commercial offices struggle with re-opening uncertainties, they also grapple with the daunting task of enabling secure and safe environments for their employees and customers. Digitization with minimum IT disruption and low manageability is on their minds.

Cash flow constraints, limited access to finances, competitive landscapes, the need for innovation, erratic revenue, uncertainties, the pace of technology change, and many more are drivers for achieving cost efficiencies within SMBs. Digital transformation is no longer the domain of only upper midmarket firms and enterprises. Techaisle's SMB and Midmarket Digital transformation survey research shows that 46% of SMBs are adopting digital transformation to reduce costs, and 38% are planning for innovation in customer engagement and services.

Helping SMBs thrive with robust IT solutions

Unbeknownst to many, the Cisco Meraki platform and the solutions it powers is a critical foundational technology to fast-forward digital transformation for SMBs. Much of this comes from its ease of use, simplicity, and flexibility for lean IT to innovate by doing more with less.

Cisco acquired Meraki in 2012, around the same time (2013), when it divested Linksys to Belkin. Over the years, Cisco has continued to innovate on its highly successful Meraki platform. It is no secret that Cisco Meraki invented cloud-managed networking technology in 2006. It has continued to innovate and expand the networking portfolio to IoT solutions and cover any business need or use case. The Meraki platform consists of switching, security & SD-WAN, wireless access points, mobile device management, and extending to IoT, including smart cameras and AI-equipped sensors to drive business intelligence.

Regarding deep intelligence and analytics, Meraki Health and Meraki Insight allow SMBs to monitor all aspects of their network and applications from the Meraki dashboard or API and easily detect and fix potential issues in minutes. Techaisle's survey shows that only 4% of small businesses have internal full-time IT staff. They spend 79% of their time on support, maintenance, and troubleshooting— creating an IT efficiency deficit and negatively impacting organizational productivity. Meraki Health's objective is to simplify troubleshooting for the lean, almost non-existent, or over-burdened small business owner/manager. Small businesses need to propel growth and enable new business initiatives freeing up time and resources. To ease the digital transformation, Meraki provides many capabilities that protect SMBs of any size, including:

• Preventing cyber-attacks: Meraki MX Security & SD-WAN appliances protect SMB businesses, users, and devices. Meraki security has the backing of Cisco Talos, one of the largest commercial threat intelligence teams globally.

• Deploying remote workers: Meraki Z3 teleworker gateways provide connectivity and secure and seamless in-office experiences. Meraki Insight delivers deep visibility into critical business applications and proactive troubleshooting for remote workers.

• Ensuring safe occupancy: Meraki MV smart cameras let SMBs maintain social distancing guidelines by remotely monitoring and tracking safe occupancy levels in physical environments through intelligent analytics, such as object detection and tracking.

• Cost savings from simplicity: All Meraki products are deployed and controlled from a single pane of glass. Meraki Health is available for all devices, saving many troubleshooting times by pinpointing specific problematic devices and clients via root cause analysis.

SMBs agree that Meraki solutions can be quickly deployed with zero-touch provisioning and configuration and remotely managed through a cloud-based GUI dashboard (single pane of glass), with all-inclusive licensing. Meraki provides 24/7 technical support (email or phone) and a lifetime warranty on devices (except cameras & outdoor APs) with advanced replacement.

Challenges in small business security

Techaisle's SMB security survey research data shows that security is a top IT priority and challenge for 76% of SMBs, and 65% are planning to increase IT security investments. Within the SMB segment, small businesses often lack the skills required to work with software-based security solutions and are 25%-33% less likely than midmarket firms to work with managed service providers.

Most small businesses are not proactive in addressing security issues, but that may not be the whole problem or perhaps even the greatest obstacle to small businesses’ adoption of security technology. Relative to midmarket firms, small businesses have limited to no internal IT security staff, are not generally working with a managed service provider capable of handling security needs, and are about 50% less likely to embrace external vendors' software-based security solutions.

While small businesses could theoretically pursue some strategies used by larger competitors, they lack the experience and skills to identify, deploy, and manage the products and relationships used to develop shields protecting valuable corporate data, applications, and human assets.

Meraki addresses these issues by providing a secure in-office experience to remote workers—giving access to applications while maintaining visibility and control from anywhere with a cloud-managed dashboard. It also encrypts data with Auto VPN, allowing employees to quickly, securely, and remotely connect to corporate locations.

Meraki smart cameras also address physical security, remote monitoring, and intelligence by including on-device storage and flexibility to access data through the cloud. The cameras allow for many playback features with machine learning and AI to compress the data and provide business intelligence instantly gleaned from long recordings. It is an ideal product for SMBs implementing social distancing guidelines, remotely monitoring physical spaces, reducing in-person exposure on-site, and ensuring comprehensive security.

How SMBs can adapt and digitize

As I said earlier, there is increasing importance for innovation and digitization (not referring strictly to the substitution of digital records for physical documents, but more broadly to the use of digital technologies to meet business goals) in SMB strategy. Dependence on technology as a critical element of business success, burgeoning complexity, and cost constraint has created a perfect storm for small businesses to adapt to changing environments using specifically designed technology.

Over the last few months, we studied use cases and Meraki's usefulness within the SMB segment. Meraki addresses real and compelling issues, and I believe it will continue to expand within the SMB community. Verticals such as healthcare, manufacturing, retail, and financial services have been quick adopters of Meraki, specifically for launching new business models, deploying remote workers, transitioning to hybrid workplaces, cybersecurity, location analysis, contact tracing, social distancing, personal safety, curbside pickup, and more.

SMB owners and executives are concerned with issues that extend beyond technology. Yet, today's business environments are increasingly dependent on IT support, products, and services that improve productivity and efficiency or expand market reach and potential.

Final Techaisle Take

IT initiatives that can be linked meaningfully to broader business objectives can attract SMB executive support – meaning that products and services that address key business priorities have the most significant growth potential. Meraki is well on its way.

Today's economy demands that technology support SMB activities. The future will be defined by them capitalizing on technology-enabled business options. If SMBs are thinking about the path forward, from today's foundation to tomorrow's opportunity, they should include Meraki in their evaluations. Writing this analysis reminds me that I work from home and should probably replace my mesh routers with Meraki devices.

In all sectors, 2020 was a challenging year – and as a result, 2021 is challenging from a market planning perspective. The disconnect between 2020 and 2019 was so severe that it rendered spend forecasts virtually useless: IT suppliers reacted to shifting market trends in real-time. As we enter 2021, IT product and service suppliers look to create a context for understanding the range of outcomes that the new year may bring. Techaisle's 2021 report series illuminates issues and requirements in the vast SMB market to support that effort. To start 2021, here are our top 10 predictions.

1. Digital inequality will be more important than the digital divide
2. Quest for reinvention, innovation, resiliency will drive bursts of incremental transformation goals
3. The hybrid workplace will require HR focus and drive adoption of workspace, workflow solutions
4. Meaningful customer partners and not trusted advisors will determine supplier success
5. Pragmatism will overtake progressiveness in technology adoption for a future-ready organization
6. Requirements for automation and enhanced IT services will become time-critical
7. Security and risk mitigation will focus on a safe middle ground
8. Systems of insight will move into the analytics mainstream
9. AI will arrive as a capability integrated within other solutions
10. Open source adoption will become an indicator of cloud success

Risk mitigation is everyone's business, and SMB IT is uniquely positioning to manage reliability, privacy, and cyber-risk. In most SMBs, IT's role is to provide users with fast and reliable connections to needed systems and data. Increasingly IT is expected to prevent leakage of sensitive information that could harm the business or its customers. A global survey conducted by leading research firm Techaisle found that security solutions (cloud and mobility) are seen as a top IT priority by 75% of SMBs.

There is evidence of the enormous requirement for the defense of an ever-expanding perimeter – but if anything, it understates SMB's focus on cybersecurity. SMBs have deployed, and continue to deploy, increasingly-sophisticated shields to protect against the relentless advance of threat sources attacking businesses of all sizes through their cloud instances, mobile devices and connected users, and new technologies (such as IoT) and core networks and systems. SMBs (and the managed services suppliers they work with) are responding by developing better internal processes and deploying IT security solutions that are frequently enhanced by advanced features rooted in analytics and AI.
Defense against cyber-threats requires a comprehensive approach that spans people, process, and technology: appropriate systems need to be deployed, configured, integrated and continuously upgraded, processes – particularly related to the management of sensitive data – need to be established and embedded in work routines, and staff (all users, including IT) need regular and relevant training. A gap anywhere in this continuum will leave openings that intruders can exploit.
And as daunting as a defense against cyber-risk may be, the reality is that IT's role in ensuring information and infrastructure integrity is extending into other vital areas as well. With businesses now reliant on technology for most tasks' performance, IT must deliver continuous access to systems and safeguard data against loss. And in most environments, it is expected that IT will play a meaningful role in maintaining the privacy of sensitive data. In today's SMB, the IT leader is responding to multiple risk management demands.

SMBs typically start with basic endpoint/user security technologies – and many stop there as well. Even organizations that deploy additional 'shields' often shy away from taking the next step beyond trying to prevent a breach: assuming that a breach will occur and developing processes and deploying technologies needed to minimize the resulting damage and exposure. Some experts also point out that many firms – SMBs and enterprises – don't fully understand their devices (including back-end infrastructure, user devices and sensors), access points, applications, data, and system users. Building this inventory is an essential step in understanding the scope of potential exposure to breaches or losses.
Deployment of security technology will be an ongoing challenge as SMBs attempt to identify, budget for, deploy, integrate, and operate the security shields that are most important to their businesses' operations. In many cases, access to skilled professionals is the most tricky part of this equation. In this environment, SMBs struggle to attract and retain capable security staff members. Increasingly, this is leading to the use of managed security services: Techaisle's global survey shows that managed security, currently used by 29% of SMBs, is in the plans of an additional 44% of small and medium businesses – which will result in a 152% increase in the use of managed security services. 

Privacy is a component of many different SMB business responsibilities: it is critical to compliance, and as a result, to senior executives and shareholders; it is a crucial issue for legal advisors; included in statements made by marketing; and of course, concerning data, it is assumed to be something that is managed by IT. Privacy is a cross-functional responsibility. Sensitive data needs to be classified as such and prioritized for the highest-level security; the security may be an IT function, but the classification needs to be done by the business leaders closest to the inputs and implications of disclosure. Leaks are very often the work of insiders rather than anonymous external hackers. Here, too, while IT plays a role (through monitoring technologies and systems that look to prevent data exfiltration), HR and business unit managers also need to be proactive in preventing privacy breaches.

Security – both the technology and the skills needed to optimize security systems and keep them current, integrated, and complete – is one of IT's most complex areas. To address these complex (and related) issues, SMB IT is needing to develop a portfolio of security technologies and skills that is equal to the task of defending against cyber-threats; develop and continuously execute on business continuity plans; deploy network and access technologies that are aligned with user needs; implement training approaches and management processes that reduce the risk that human error (or malfeasance) will bypass the SMB's technology shields.

They cannot do it in isolation. There is no 'silver bullet' that SMB executives can use to deliver a failure-proof, future-proof approach to risk management. However, by connecting security, privacy, and reliability/continuity – by working with the right suppliers who understand business requirements – SMB IT leaders want to make a real difference to their organizations' regulatory compliance, customer trust, and bottom-line success.