Most Small Businesses will be virtual by 2020

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Outsourced business services and hosted applications will be the norm for small and mid-sized businesses (SMBs) by the year 2020, according to a report by the Social Issues Research Centre.

While 2020′s always-on Generation “C” – C for Content, Connectivity, Creativity, Collaboration and/or Communication, says SIRC – will be more able to communicate with a wider cross-section of people, virtual businesses will be outsourcing the majority of business functions, the report claims.

The study (here) predicts that purchased and locally installed software will be replaced by Software as a Service (SaaS), accessed over the internet.

“If I was an IT director, I’d want my staff focused on delivering value to the business, not patching servers,” he noted. “For example, with the hosting provider now doing security, the security team’s job is as custodians, not fire-fighters.”

Personally, I’m excited by SaaS. Today’s web innovators and entrepreneurs already get this – Outsource as much as possible, use the freeness of Web 2.0 consumer apps. However, once their businesses experience significant growth, the free consumer based Web 2.0 stuff will no longer meet their needs. This is where SaaS comes in.