Small and medium-sized businesses will increase their technology spending during 2023, although not to pre-pandemic levels. The growth could set the stage for the increasing use of HR-related software solutions and funding of post-pandemic digital transformation efforts.
The technology research and consulting firm Analysys Mason believes that the 145 million SMBs working around the world today will spend $1.45 trillion on IT over the course of the year.
Post-pandemic digital transformation efforts are behind much of the spending, which represents year-on-year growth of 6.3% compared to 2022, Analysys Mason said. That was down from the 7% expected before the pandemic.
Analysys Mason said its predictions point to a shakeup in how vendors and the reseller channel sell to SMBs. The firm said one in three SMBs plan to switch channel providers in order to gain enterprise levels of service and support.
Small companies continue to invest in IT, although the decision-making process takes longer because SMBs are carefully examining the costs and benefits of new solutions. In addition, SMB behavior has shifted significantly, resulting in more demand for cloud-based and as-a-service solutions. Those elements have become a key SMB strategy, Analysys Mason said.
“SMB technology spending is gradually getting back to pre-pandemic levels,” said Bob Takacs, Analysys Mason’s research director. “SMBs have a high degree of confidence in their own businesses given that they pulled through the pandemic successfully and are focused on how they can be more effective and set up for growth.”
Technology vendors and resellers should be focusing their efforts on service and support, while delivering clear messages around the business use cases of technology solutions, said Analysys Mason. SMBs are looking for simple procurement and installation, tiered pricing and comprehensive support.
New Spending Priorities
Analysys Mason predicted as-a-service spending will increase this year. For example, SMB spending on platforms-as-a-service solutions is expected to grow by 18% year-on-year, from $3.4 billion in 2022 to $4 billion in 2023. SMBs will demand more flexibility without committing to expensive technical resources. Early adopters will increase their use of advanced analytics tools such as business intelligence and AI-powered applications.
SaaS spending is expected to grow from $44 billion in 2022 to $54 billion in 2023, 22% year-on-year growth. SMBs are seeking to optimize and automate functions to increase efficiency and improve data utilization, Analysys Mason said.