IT Spending Outlook: American Small and Midsized Business

By Dan Berthiaume

Overall IT spending by American SMBs with fewer than 1,000 employees will exceed $138 billion this year, according to new estimates from IDC. While packaged software and PCs will represent the largest share of this spend, the midsized (100-999 employees) portion of the SMB market in particular will also show strong spending in IT services. Here’s a look at some of the highlights from IDC’s report “US Small- and Medium-Sized Business 2012 to 2016 Forecast.”

SMBs will dedicate the largest portion of their 2012 IT dollars to packaged software and PC purchases. SMB packaged software spending will total almost $50 billion, or more than one-third of the total. In addition, the small business segment (fewer than employees) will especially focus on purchasing PCs and peripherals, with notebooks and media tablets attracting the most small business attention.

SMB Services Spending will Near $40B

In good news for MSPs, SMB spending on IT services is expected to reach $38 billion this year. While equaling more than a third of total SMB IT spending, it is still less than the roughly 50 percent of total IT spending that large enterprises dedicate to services. Mid-sized businesses will spend about three times as much on IT services as small businesses.

Systems, Storage, Networking Less Popular

Systems and storage will continue to be the slowest-growing IT category in the SMB space. While SMB interest in servers and storage is expected to remain strong, the appeal of virtualization is expected to slow the growth of the server installed base, particularly in the midsize segment.

Meanwhile, the networking equipment category will account for the smallest share of total SMB IT spending throughout the forecast period. More than one-third of SMBs have not yet deployed networks, and despite increasing interest in networking and network-enabled technologies such as SaaS, cloud resources, and unified communications, IDC predicts SMB spending in this area will remain relatively modest through 2016.

The MSP Game Plan

Armed with these predictions, MSPs serving an SMB client base can develop a 2012 game plan. First of all, MSPs should focus on offering hosted versions of popular packaged business software applications, complete with upgrades, add-ons, operational scalings, and any other extra services SMBs may need. MSPs should also take heed of heavy SMB interest in mobile computing devices and offer managed service functionality that is accessible via notebooks, tablets and other portable PCs.

It is also apparent that the mid-sized segment of the SMB market offers MSPs more opportunity. The small segment provides many unique needs for MSPs to fill and should not be ignored, but the larger players in the SMB vertical appear poised to generate most of the managed services revenue. And MSPs should also realize that servers, storage and networking services are worth offering, but not expect them to be primary profit drivers from their SMB clients.

So despite some foreboding ancient prophesies about 2012 bringing doom, it appears that at least in the case of SMB managed services, this year will bring revenue growth and opportunities for new business in key areas. Not such a bad year after all.