Growing SMB tech spending prioritizes infrastructure, managed services

Dive Brief:

In the next five years, small and medium businesses will prioritize infrastructure, managed services and security spending as part of a business growth push, according to a report from Analysys Mason.
SMBs, companies with fewer than 1,000 employees, are expected to increase IT spending over the coming years as economic worries subside. Companies in this category will increase IT spending by 5.4% this year, roughly in line with Gartner's projection of enterprise spending growth of 5.5%.
Companies in the SMB category are expected to steadily increase their technology budgets each year, to reach 8.3% year-on-year growth by 2027, according to the report.

Dive Insight:

Small and medium businesses contend with similar technology demands as large enterprises. Employees and customers expect seamless digital capabilities regardless of company size, but SMBs face different challenges to establishing effective IT operations.

"As you'd expect, the bigger you are, the larger your IT budget," said Brian Jackson, research director at Info-Tech Research Group, in an email.

Much like large enterprises, SMBs made big cloud investments at the start of the pandemic, Jackson said. Now, tech leaders at smaller companies are working to reap the benefits from those investments.

Specific areas of priority for the next five years in SMB spending include cloud storage, cloud compute, endpoint security and mobile security, according to Bob Takacs, research director at Analysys Mason.

SMBs are working to migrate most of their infrastructure and cybersecurity workloads to the cloud along with business applications, a process that's been ongoing in recent years, Takacs said in an email.

As vendors continue to work with customers to rationalize spending, SMB leaders have an opportunity to expand the impact of their existing IT budgets.

"We see that cloud solutions can offer SMBs a cost-effective means to help build the necessary IT requirements to support resiliency and continuity, which we predict are key SMB priorities," Takacs said. "Specifically, now is a good time for SMBs to initiate discussions with IT vendors as there is an eagerness on their part to support the SMB ecosystem."