Skip to main content

Software and Services Drive New IT Spending at SMBs

Digital transformation projects have fueled the IT budgets of all business types. Total IT spending by small and medium-size businesses (SMBs) will approach $568 billion in 2017, and exceed $676 billion by 2021, according to the latest worldwide market study by International Data Corporation (IDC).

With a five-year compound annual growth rate (CAGR) of 4.5 percent, spending by businesses with fewer than 1,000 employees on IT hardware, software, and services, including business services, is expected to be slightly stronger than IDC's previous forecast.

SMB IT Market Development

"SMB IT spending growth continues to track about two percentage points higher than GDP growth across regions. But beneath that slowly rising tide are faster moving currents that reflect the changing ways SMBs are acquiring and deploying technology," said Ray Boggs, vice president at IDC.

SMBs will spread their IT investments about equally across the three major categories -- hardware, software, and IT services -- with these categories accounting for more than 85 percent of total SMB technology spending worldwide.

While hardware purchases currently represent the largest share, IDC expects software and IT services spending to surpass hardware spending in 2019. The smallest of the major categories -- business services -- will see the greatest spending growth of the four technology categories at 7.1 percent CAGR, followed closely by software at 6.9 percent CAGR.

Hardware spending will be led by purchases of PCs and peripherals, which accounted for almost half of SMB hardware spending in 2016 (49.6 percent) a share that will decline throughout the forecast period to 43.3 percent. SMB services spending is divided between IT services and business services.

While SMB spending on IT services will be more than twice that of business services throughout the forecast period, business services' share is growing, with spending growth roughly twice that of IT services (7.1 percent vs. 3.7 percent CAGR).

According to the IDC assessment, medium-sized businesses (100-499 employees) will be the largest market throughout the 2016-2021 forecast, with 38 percent of worldwide SMB IT products and services revenues coming from this group of companies.

The remaining revenues will be generated equally by large businesses (500-999 employees) and small businesses/small offices (1-99 employees). Medium and large firms will also experience the strongest spending growth with CAGRs of 4.6 percent and 4.5 percent respectively, slightly above small business spending growth of 4.4 percent.

Outlook for Regional Growth Trends

On a geographic basis, the United States represents the largest market with SMB IT spending expected to total $171.3 billion in 2017. North America in total will account for about one third of worldwide SMB IT spending throughout the forecast period.

Western Europe and Asia-Pacific (excluding Japan) are the second and third largest regions for SMB IT spending, with Asia-Pacific growing faster than the overall market. The region with the fastest growth over the five-year forecast will be Latin America (6.3 percent CAGR), although the U.S. and Asia-Pacific (excluding Japan) will not be far behind.

Popular posts from this blog

Digital Talent Demand Exceeds Supply in Asia-Pac

Even the savviest CEO's desire for a digital transformation advantage has to face the global market reality -- there simply isn't enough skilled and experienced talent available to meet demand. According to the latest market study by IDC, around 60-80 percent of Asia-Pacific (AP) organizations find it "difficult" or "extremely difficult" to fill many IT roles -- including cybersecurity, software development, and data insight professionals. Major consequences of the skills shortage are increased workload on remaining digital business and IT employees, increased security risks, and loss of "hard-to-replace" critical transformation knowledge. Digital Business Talent Market Development Although big tech companies' layoffs are making headlines, they are not representative of the overall global marketplace. Ongoing difficulty to fill key practitioner vacancies is still among the top issues faced by leaders across industries. "Skills are difficul

How Cloud Fuels Digital Business Transformation

Across the globe, many CEOs invested in initiatives to expand their digital offerings. User experience enhancements that are enabled by business technology were a priority in many industries. Worldwide end-user spending on public cloud services is forecast to grow 21.7 percent to a total of $597.3 billion in 2023 -- that's up from $491 billion in 2022, according to the latest market study by Gartner. Cloud computing is driving the next phase of digital transformation, as organizations pursue disruption through technologies like generative Artificial Intelligence (AI), Web3, and enterprise Metaverse. Public Cloud Computing Market Development "Hyperscale cloud providers are driving the cloud agenda," said Sid Nag, vice president at Gartner . Organizations view cloud computing as a highly strategic platform for digital transformation initiatives, which requires providers to offer new capabilities as the competition for digital business escalates. "For example, generativ

Mobile Device Market Still Awaiting Recovery

The mobile devices market has experienced three years of unpredictable demand. The global pandemic, geopolitical pressures, supply chain issues, and macroeconomic headwinds have hindered the sector's consistent growth potential. This extremely challenging environment has dramatically affected both demand and supply chains. It has led to subsequent inflationary pressures, leading to a worsening global cost of living crisis suppressing growth and confidence in the sector. In tandem, mobile device industry stakeholders have become more cautious triggering market uncertainties. Mobile Device Market Development Operating under such a backdrop, the development of mobile device ecosystems and vendor landscapes have been impacted severely. Many of these market pressures persisted throughout 2022 and now into 2023, borne chiefly by the smartphone market. According to the latest worldwide market study by ABI Research, worldwide smartphone shipments in 2022 declined 9.6 percent Year-over-Year