SMB’s IT spending in 2017 and projections revealed by IDC

Retail technology spendingMarket research IDC has revealed the IT spending by SMBs (small and medium-size businesses) in 2017 and projections for 2021.

IT spending by SMBs globally will be $568 billion in 2017. SMB’s IT spending will increase by more than $100 billion to cross $676 billion in 2021 with a five-year compound annual growth rate (CAGR) of 4.5 percent.

“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.

Global SMBs are keen to make investment in resources to improve employee productivity and improve their competitive positions.

SMBs will spread their IT investments about equally across the three major categories – hardware, software, and IT services – with these categories accounting for more than 85 percent of total SMB technology spending.

While hardware purchases currently represent the largest share of the total IT spending, software and IT services spending both surpass hardware spending in 2019.

Business services, the smallest of the major IT categories, will see the greatest spending growth of the four technology categories at 7.1 percent CAGR, followed closely by software with 6.9 percent CAGR.

One third of all SMB software purchases in 2017 will be from the top 3 applications categories: enterprise resource management (ERM), customer relationship management (CRM), and content applications. Application development & deployment and system infrastructure software will also be key areas for SMB software investment.

Hardware spending will be led by purchases of PCs and peripherals, which accounted for almost half of SMB hardware spending in 2016 (49.6 percent) a share that will decline throughout the forecast period to 43.3 percent.

While SMB spending on IT services will be more than twice that of business services throughout the forecast period, business services’ share is growing, with spending growth roughly twice that of IT services (7.1 percent vs. 3.7 percent CAGR).

Medium-sized businesses (100-499 employees) will be the largest market throughout the 2016-2021 forecast with 38 percent of worldwide SMB IT products and services revenues coming from this group of companies.

The remaining revenues will be generated about equally by large businesses (500-999 employees) and small businesses/small offices (1-99 employees).

Medium and large firms will experience the strongest spending growth with CAGRs of 4.6 percent and 4.5 percent respectively, slightly above small business spending growth of 4.4 percent.

United States represents the largest market with SMB IT spending expected to total $171.3 billion in 2017.

North America in total will account for about one third of worldwide SMB IT spending throughout the forecast period.

Western Europe and Asia/Pacific (excluding Japan) are the second and third largest regions for SMB IT spending, with Asia/Pacific growing faster than the overall market.

IT spending by SMBs in Latin America will achieve 6.3 percent CAGR – representing the fastest growth over the five-year forecast period. U.S. and Asia Pacific excluding Japan will not be far behind in terms of IT spending by SMBs.

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