The 145 million SME businesses worldwide are expected to spend $1.45trn on IT in 2023, of which 40% will be from the Americas, 30% from Europe, the Middle East and Africa and 30% from Asia–Pacific, driven by the post-pandemic trend towards digital transformation.
This represents a growth of 6.3% compared with spending in 2022, down from 7% year-on-year growth that was expected before the pandemic; this is due to the impact of inflation and economic uncertainty.
The predictions, based on the data in Analysys Mason’s SME Technology Forecaster, which provides insights into SME spending in 132 technology categories in 52 countries, point to a shakeup in how vendors and the reseller channel sell to SMEs. Its research has found that one in three SMEs plan to switch channel providers to gain enterprise levels of service and support. SMEs are continuing to invest in IT, although the decision-making process is taking longer because SMEs are carefully examining the costs and benefits of any new solution. Furthermore, SME behaviour has shifted significantly resulting in more demand for cloud-based and as-a-service solutions, which have become a key SME strategy.
“SME technology spending is gradually getting back to pre-pandemic levels,” says Bob Takacs, Research Director, Analysys Mason. “While there is concern about the broader economic environment, SMEs 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. They are looking for managed services and solutions that enable them to do that, without having to manage their own IT environments.”
The message to technology vendors and resellers is to focus on service and support, while delivering clear messages around the business use cases of technology solutions. SMEs are looking for simple procurement and installation, tiered pricing and comprehensive support.
2023 SME technology predictions
According to the study, SMEs are set to invest in a range of technologies for a range of reasons. Some of the key investment priorities noted by the study include:
- SMEs are the new ‘enterprise-lite’ accounts
37% of SMEs plan to switch channel partners in favour of an ‘enterprise-lite’ experience of support and services that enable full client lifecycle management such as pre-sales, onboarding, account management, defined touchpoints and communication channels.
- SMEs will look to managed service providers (MSPs) for more than IT management
SMEs’ IT spending through MSPs is expected to grow by 11% year-on-year from USD279 billion in 2022 to USD311 billion in 2023, driven by the need for end-to-end support in managing increasingly complex software stacks and driving forward digital initiatives.
- SMEs will spend more than $66 billion on IT solutions from telecoms operators
SMEs will increasingly look to telecoms providers for IT advice, support and services. 80% of SMEs would consider taking IT services from operators. Operators are creating targeted IT services bundles for SMEs and partnering with software/service providers to help them to reach a broader SME market.
- As-a-service spending will increase
SMEs’ spending on platforms-as-a-service (PaaS) solutions is expected to grow by 18% year-on-year from USD3.4 billion in 2022 to USD4.0 billion in 2023 as SMEs demand more flexibility without committing to expensive IT resources. Early adopters will increase their use of advanced analytics tools such as business intelligence (BI) and AI-powered applications.
Software-as-a-service (SaaS) spending is expected to grow from USD44 billion in 2022 to USD54 billion by 2023, representing a 22% year-on-year growth. SMEs are seeking to optimise and automate functions to increase efficiency and improve data utilisation. Spending on BI, ERP and line-of-business software such as electronic health records, 3D design, and IT monitoring solutions, will increase rapidly as a result.
PC and device-as-a-service (PCDaaS) models will shift focus from device procurement to a fully integrated IT experience. SMEs will increasingly value a holistic experience that includes services for deployment, desktop support, recovery, security and managed services for their dispersed workforce.
- Rising energy costs will affect SMEs’ IT spending decisions
SMEs will look for ways to increase energy efficiency and to gain better control of their budgets. This will lead to an increase in the use of IoT-related solutions, such as energy usage apps and smart meters, in addition to finance and expense management applications.
- Environmental, social and governance (ESG) initiatives will become a priority for SMEs
24% of SMEs worldwide plan to start ESG initiatives and 46% are more likely to buy from vendors with established ESG policies.
- Cyber security remains a top priority
SMEs will continue to be concerned about cyber security thanks to device proliferation and ongoing geopolitical concerns. Spending on cyber-security solutions will increase from USD69 billion in 2022 to USD77 billion in 2023.