technology spending

SMBs to spend over USD66 billion on IT solutions for driving innovation – survey by Analysys Mason

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Despite economic challenges, small and medium-sized businesses (SMBs) are expected to up their technology spending in 2023. Analysys Mason’s research reveals that this confidence is also evidenced by a third of SMBs planning on switching channel providers for the offered enterprise levels of service and support.

With digital transformation initiatives increasingly vital to meet post-pandemic needs, the segment of ‘early adopters’ among SMBs is projected to expand from 10% worldwide to 15%. These SMBs are forward-thinking in their approach and leveraged modern technologies and tested new features and product sets along with greater IT investments.

The rising costs of energy are posing a challenge to small and medium-sized businesses when it comes to IT spending decisions. As they seek more sustainable options in the long run, SMBs will likely turn towards IoT solutions for greater efficiency. Moreover, increased focus on budget control could lead them towards investing in financial expense management software as well.

As businesses become increasingly aware of the importance of Environmental, Social, and Governance (ESG) initiatives, plans to implement these priorities are on the rise. 24% of SMBs are planning to start internal ESG initiatives whereas 46% will be buying from vendors with established ESG policies.

Ecosystem transformations of SMBs in 2023

Small and medium-sized businesses (SMBs) have emerged as the new enterprise-lite accounts, with 37% of them planning to switch channel partners for better ongoing support and service. In response to changing technology needs, SMBs are now demanding a full client lifecycle management experience from their vendors.

As the SMB software stack grows more complex and digital initiatives arise, businesses are turning to MSPs for comprehensive support. MSPs have responded by offering unified platforms of various solutions to meet these demands – resulting in a 11% annual increase in IT spending of SMBs reaching USD311 billion in 2023 as compared to 2022.

In a bid to stay ahead of the curve, SMBs will invest more than USD66 billion in IT solutions from operators. As per the study, 80% of SMBs are open to taking up such services with telecom providers providing valuable advice and support along the way. Operators have responded by creating bespoke bundles for SMBs. Forming partnerships with software/service providers will further enable operators to widen their SMB market reach.

New spending priorities of SMBs in 2023

40% of SMBs will persist in working from home at least partially. The need for PC and device-as-a-service (PCDaaS) models has subsequently grown, shifting focus away from hardware procurement to a more comprehensive IT experience. Therefore, SMBs will invest in solutions that include deployment, desktop support, recovery services, security measures, and managed services for dispersed workforces.

SMBs are expected to boost their investments in platform-as-a-service (PaaS) solutions, driven by the need for IT resource efficiency. PaaS offers SMBs a cost-effective way of managing operations and provides flexibility when it comes to planning activities. Additionally, increasing usage of advanced analytics tools such as BI software or AI applications will contribute significantly toward open spending on PaaS technology which is projected to rise 18% from USD3.4 billion in 2022 to USD4 billion in 2023.

As the number of connected devices in a geopolitically charged environment continues to rise, so does the need for increased cyber security spending. From 2022 to 2023 alone, this expenditure is predicted to climb from USD69 billion to USD77 billion with more money being spent on solutions such as hardware-based authentication, extended detection and response services, cloud workload protection, operational technology systems protection, and artificial intelligence/machine learning based security.

SMBs will increase their spending on software-as-a-business (SaaS) solutions, most notably in the areas of Business Intelligence systems, Enterprise Resource Planning tools, and line-of-business applications. This surge is set to bring about a rise from USD44 billion in 2022 to roughly USD54 billion by 2023, translating into an impressive 22% year over year growth.

Source: Analysys Mason

Read next: What do SMBs look for when buying SaaS technology?

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