With IT budgets expected to be tight this year, small business owners must make wise investments in order to stay competitive. While most analysts believe some cutting-edge trends, like mobile advertising, are still half a decade away from offering immediate ROI to small and medium-size businesses (SMBs), technologies such as virtualization and the burgeoning proliferation of portable, Internet-connected devices can be well suited for midmarket companies.

1. Cloud Computing
Put simply, cloud computing is a way for SMBs to access enterprise-class technology with minimal up-front costs and easy scalability. Over the next three years, we’ll see cloud computing continue to expand. Because cloud computing allows a large number of networked computer systems to share an IT infrastructure, operating “in the cloud” frees small business owners previously limited by the capabilities of local or remote computers. It also allows midmarket companies to reduce in-house IT infrastructure costs and transfer day-to-day business applications to the cloud from their terrestrial offices.

Cloud computing is particularly attractive to SMBs because it allows them to reduce up-front investment in technology infrastructure and use Web-hosted services as they would electricity or water—paying only for what they use. But John Sloan, a senior research analyst at Info-Tech Research Group who likened the cloud computing market to a "gold rush," said SMBs need to understand some of the unresolved issues around cloud computing.

"The attraction of cloud computing options right now is very similar to the attraction [of] distributed processing. It offers opportunities to do things with a far lower threshold of investment than what was traditionally thought possible," Sloan said. "In the same way the SMBs led distributed processing in the '90s, I think that the opportunity is there for a company like Zoho to show the benefit of lowering that threshold."