New data from International Data Corporation (IDC) forecasts that total IT spending by small and medium-size businesses (SMBs) will approach $568 billion in 2017 and increase by more than $100 billion to exceed $676 billion in 2021.
With a five-year compound annual growth rate (CAGR) of 4.5%, spending by businesses with fewer than 1,000 employees on IT hardware, software, and services, including business services, is expected to be slightly stronger than the research group’s previous forecast.
“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.
SMBs around the world are increasingly interested in investing in resources to improve employee productivity and improve their competitive positions. Boggs noted that while SMBs, especially smaller ones, have immediate tactical needs to sharpen performance, they are also looking to coordinate resources in a meaningful way. For many this will be an important step towards Digital Transformation (DX).
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% of total SMB technology spending worldwide. While hardware purchases currently represent the largest share of this spending, IDC expects 2019 to be the watershed year when software and IT services spending both surpass hardware spending. The smallest of the major categories – business services – will see the greatest spending growth of the four technology categories at 7.1% CAGR, followed closely by software (6.9% CAGR).