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Digital transformation driving increased SME IT spending

An analysis of the global SME market from IDC has found that drives to increase productivity and unearth competitive gains are driving IT spending

SME spending on IT is being driven by many of the digital transformation trends that are shaping spending decisions at larger enterprises.

Small firms want the same improvements in employee productivity and competitive position that technology promises to deliver and are prepared to spend in those areas.

IDC has updated its worldwide SME spending guide and revised its forecasts upwards because spending is expected to be stronger than previously expected.

This year should bring in $568bn in global SME spending on IT with software and services taking a big chunk of that investment.

The analyst house is expecting the market to maintain the growth momentum and reach the heady heights of $676bn IT spending by 2021, an annual growth rate of 4.5%.

"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, SMB Research at IDC.

Boggs views the current spending as part of a strategy by many SMEs with fewer than 1,000 staff to get themselves ready for digital transformation.

IDC is expecting spending to be spread equally across hardware, software and services, although for the first time the analyst house expects 2019 to be the year when the money being spent on tin is overtaken by the other categories.

Western Europe is the second largest spending area after the US and IDC is monitoring the growth in the born-in-the-cloud firms that are shaking up what can often be a fairly traditional market segment.

"Even if these companies represent only a small percentage of the overall SMB market, they can set the scene and pave the way to a broader adoption of innovative IT solutions," said Angela Vacca, senior research Manager, customer insights & analysis at IDC.

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