Small and medium businesses (SMBs) spent $65.8B in IT services in 2005, with spending to grow to $72.9B in 2006, according to research group IDC. What will SMBs be spending on this year? Some clues can be found in a recent Conference Board survey of CEOs and CIOs.Their top challenges for 2006:

• Sustaining steady top-line growth;
• Consistently executing on strategy;
• Customer loyalty and retention; and
• Profitable growth.

They also stressed the importance of faster speed to market, keeping up with new technologies, and seizing opportunities for expansion and growth. Here's a look at five growing themes that can help your business meet the above goals and challenges.

Staying healthy will keep you productive
The first step in keeping your business healthy is protecting it from ailments that could result in potential downtime.

According to a recent Gartner report, the growth of new applications such as mobile computing, Voice over Internet Protocol (VoIP), XML, and Instant Messaging will make security a major challenge for SMBs in 2006.

North American spending on security will increase in the areas of Intrusion Detection and Prevention, and Unified Threat Management by a respective 26% and 25% according to IDC. Maintaining business uptime will minimise potential lost revenues and greater operating costs, while ensuring a stable business environment for potential growth.

It's necessary to be resilient to all sorts of potential risks to keep compliant to current and future regulatory conditions. Gartner says many CEOs and CFOs will continue to ask their CIOs and IT directors to sign compliance statements as compliance spending is currently growing twice as fast last year.

The META group says companies that implement spend management solutions can help address these compliance issues.

Spend management solutions not only help with compliance but can also help you manage every aspect of supplier data, including back-end analysis for greater cost efficiencies. These solutions provide visibility on every aspect of your company's spending to help you make changes to improve your operations and better leverage supplier relationships.

Companies using spend management solutions are experiencing cost savings of at least 10 percent a year.

More IT bang for your buck
The desire to improve business processes and be responsive to stakeholders' demands is increasing the need for IT efficiency and flexibility. The development of a service-oriented architecture (SOA) can help create that flexible environment.

SOA uses Web Services, which are standards based services that convert existing IT assets into flexible, reusable "building blocks". These "building blocks" can easily be combined with new technologies or used to develop new business solutions or processes. SOA maximises the value of existing IT assets by reducing the cost of future implementation and development.?

Linux is another technology that helps SMBs get more out of their IT. Linux is an open-source revolution that offers highly stable and powerful operating systems and servers. According to a 2005 VARBusiness Midmarket survey, 32% of SMBs had implemented Linux. Of those companies, 70 percent said Linux had delivered ROI in improved operating efficiencies and lower costs. More importantly, 76% of companies with 100-249 employees have experienced a positive ROI.

Even with SOA and Linux options, resource constrained SMBs are continually challenged to getting the most out of their IT. Gartner believes more SMBs should look towards using managed services in 2006 to help.

Managed Service Providers (MSPs) help manage the day-to-day IT responsibilities for organisations. This can include everything from desktops, networks, servers, security, storage, applications and databases, to your entire IT infrastructure. MSPs offer SMBs hosted solutions, grid computing and utility based computing options to give companies "pay-for-what-they-use" capabilities for increased financial flexibility.

Your virtual office just got bigger
The flexibility of working anywhere anytime isn't going away. Pervasive wireless technologies are helping SMBs achieve a mobile state of utopia by providing employees access to back office data and applications, whenever and wherever they may roam.

Greater wireless productivity is being achieved through the usage of Sales Force Automation (SFA) tools and Field Force Automation (FFA) tools, which allow mobile employees access to critical real-time information such as order taking, order status, contact info, e-mail and CRM.

Mobility however, doesn't stop with just your employees. It also applies to your products and services and Radio Frequency Identification (RFID) can help you keep track of the movement of your potential profits. Stray movements increase costs, thus using RFID can help you track your goods more efficiently to reduce inventory and shrinkage for lower store and warehouse costs.

Greater supply chain efficiency will also reduce out-of stock items for faster speed to market for your goods to improve customer satisfaction and profitability.

Communicate dynamically
Anywhere, anytime productivity can also be enhanced with the usage of Instant Messaging (IM) tools. IM brings employees from different geographies or time zones virtually together for private, real-time communication and collaboration with file sharing and video sharing options to improve team productivity.

IM can speed up decision making, improve customer response times, and improve time to market for services and products. IM usage is growing and some researchers even predict it will surpass e-mail as the primary way people interact electronically in 2006.

Interacting with your customers through e-mail or other channels such as wireless phones, PDAs, the Internet, satellite radio, interactive television or through digital music players via Podcasting, can be done dynamically with digital media.

Digital media files such as digital photographs, videos, digital audio, PDFs and other images can help your businesses enhance its marketing power by creating new compelling user experiences for better customer loyalty and brand awareness.

Digital Media can also help you improve your speed-to-market for services and products, and potentially grow new revenue streams.

Microcommerce - A macro opportunity for growth
The proliferation of new customer channels such as wireless, interactive TV, and digital media players have resulted in new potential revenue streams via Microcommerce.

Microcommerce involves low dollar value electronic transactions (usually under $5), using electronic payment methods. According to Ipsos-Insight, more than 14 million Americans age 12 and older purchased digital content for less than $2 in the past year, a 10 percent increase from last year.

Microcommerce caters to those online consumers who are the least likely to have a credit card or use their credit card online for such a small charge.

Business can now unbundle electronic content and sell it profitably online, in small units. For example, content providers can sell customised "pay per view" services such as a single article from a publication or subscriptions for certain features or sections, or for individual lookups from a dictionary or encyclopedia.

Offering low-cost products or services is a great way to ensure a steady income stream for your business. Explore what untapped assets your business may have that can be unleashed via microcommerce.

Stick to your resolutions
To better compete in 2006, SMBs will need to increase the stability and efficiency of their IT to help execute on business goals.

Wireless technologies can increase your company's productivity and improve customer responsiveness. Interactive communication tools can improve customer satisfaction and internal collaboration for greater business efficiency.

When deploying these new tools, it's important to consider security to minimise risks and downtime that could impede your company's growth.

Flexible IT environments using SOA, open sourced Linux solutions, or Managed Services will increase your ability to respond to market changes.

Make your resolutions now and plan on sticking with them to reap greater long-term benefits for your business.

March 2006

Article Courtesy of IBM