|We're closing in on a decade since the Great Recession of 2008. And I remember a focus group in Phoenix in 2017 where small business construction firm owners foreshadowed what was to come as high raw material end energy costs cut profit to the bone and left them little financial cushion when the wheels came off in the fall of 2017. After ten years, the global economy has been steadily improving, though of course pockets of problems are still around (ask the unemployed young people in Western Europe or older job seekers looking for factory work almost anywhere).|
Technology spending, especially among small businesses (1-99 employees) and midsize firms (100-999 employees), continues to be a bellwether of continuing economic improvement. With some regional variation, SMBs are boosting their spending by roughly 2 percentage points over annual GDP growth. In fact, IDC as tweaked five year SMB spending growth forecasts up to 4.5% through 2021, compared to 4.2% last year (see Worldwide Semiannual Small and Medium Business Spending Guide). Globally, SMB IT spending will be increasing by about $25 billion annually ($25 billion!) to top $676 billion in 2021. (Two-thirds of a trillion -- not too shabby).
Every technology segment and every geo will be contributing to this growth, but some more than others. The transition will continue from "Second Platform" technology which is centered on PCs, servers, and networking to "Third Platform" technology which focuses on cloud, mobility, analytics, and social. IDC's "Innovation Accelerators" will also be having longer term impact on spending down the road – this is where Internet of Things, Robotics, Augmented/Virtual Reality, 3-D Printing, Next Gen Security, and Cognitive Systems all fit in. But this is far in the future for typical SMBs. "Digital Transformation" is not really a spending priority. (See 2017 U.S. SMB Digital Transformation Paradox Jul 2017 | Doc #US41381417.) Immediate problem solving is the answer, which is why a mix of traditional on premise technology and hosted offerings will be most appealing to SMBs.
Hardware spending has been at the heart of SMB technology spending for decades, but change is in the air. Supported by past investment in on premise resources, as well as by alternative hosted capabilities, SMBs will be able focus more on software and services. IDC predicts that 2019 will be the watershed year for SMB IT spending – that's when total spending on software as well as services worldwide will be greater than total spending on hardware.
Source: IDC Worldwide Semiannual Small and Medium Business Spending Guide, 2016H2
Regionally we're looking at a shift from slower growing developed nations and faster growing developing nations, which really started three years ago, with the slowing of BRIC growth (Brazil, Russia, India, China). Since then there's been a return to growth everywhere, especially in Latin America. But even so, 2/3 of SMB spending comes from the North America and Western Europe (and it tops 70% when you add Japan). Not that SMBs in developing countries are not interested in expanding their technology engagement, in fact a higher percentage agree that advanced technology is a competitive differentiator than in developed countries, with maybe the exception of the US where SMBs have similar agreement.
The SMB Blog: Riding the Fast-Moving Waves on the Rising Tide of Global SMB IT Spending
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- Posted By:
- Ray Boggs
- July 26, 2017
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