Microsoft Spotlights $420 Billion Small and Medium Business Opportunity
Microsoft urges MSPs to tap into the SMB opportunity as firms look to increase their IT budgets this year.
![Microsoft's Sharon Schoenborn at NerdioCon 2023 Microsoft's Sharon Schoenborn at NerdioCon 2023](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt34056933ae6cf954/652404e779c8533d64f472e5/Schoenborn-Sharon_Microsoft-NerdioCon-2023.jpg?width=700&auto=webp&quality=80&disable=upscale)
There are roughly 400 million small and medium businesses globally, delivering up to 70% of the world’s GDP. Microsoft categorizes the “medium” part of SMB business as from 25 employees, on up to 500. This, said Sharon Schoenborn, corporate VP, North America, Small, Medium and Corporate (SMC), Microsoft, is where the sweet spot is in terms of the addressable market.
“This is where we see about 75% of that total addressable market,” she told MSPs. “That is a great place where all of you play and there’s so much opportunity here today. Our customers in this space look to you to be able to provide advisory services and end-to-end services plus support — to be able to help them realize their goals through technology.
Younger people are becoming a higher proportion of both the workforce and decision makers, said Schoenborn. This means MSPs need to recognize changing purchasing behaviors.
“They are more geared toward SaaS; they are more geared toward researching the technology that they’re engaging in. More often than not they are early adopters of technology. As these individuals become a key part of our workforce and decision makers, they see technology as being essential to how they achieve growth. That’s a really exciting time, especially when it’s available through the cloud.”
Not only are two-thirds of SMBs planning to increase their IT investment over the next 12 months, they are looking to hire and extend their office locations.
“The average proportion of annual revenue allocated to IT budget has increased to 4.6%. So [these are] all great signs in terms of total momentum in the market,” said Schoenborn.
So, what are SMBs really looking to prioritize when it comes to their tech spend? They are looking for ways to grow their business, but also to keep staff engaged and productive. Schoenborn said the solutions developed by Nerdio are “front and center of that.”
“[SMBs] continue to want and need to do more with less. This is incredibly important, especially if we think about … cost optimization and ensuring that they get value for money and time to value. But they’re also looking to ensure that they have their environment secured and again looking to yourselves as professionals to provide help,” said Schoenborn.
More than a third (34%) of small and medium businesses say their top challenge is implementing new technologies securely. Twenty-six percent say enabling remote workers to securely connect to their business systems is a top priority.
In terms of Microsoft Cloud, Schoenborn said the focus was on “putting people first and being able to help customers to do more with less with an integrated secure platform. We want to bring this value to them through the ubiquity platform, and you’re the ones who do that for them every single day.”
The market for cloud is accelerating, said Schoenborn. She cited Gartner research that indicates that by 2025, the cloud market will be more than double that of the on-premises market.
“When I translate that, what comes to mind is opportunity for all of us. Combined with momentum in the market, some trending and positive signal from our SMB customers in terms of their tendency to spend more on IT, combined with your capabilities in the innovation that we’ve discussed today, I feel like there’s so much opportunity ahead of us,” said Schoenborn.
She called on the MSPs in attendance to be “change agents.” She quoted Microsoft CEO Satya Nadella, who said change agents “make doing more with less possible: less time, less cost, less complexity, but with more innovation, more agility, and more resilience.”
However, the exec offered a word of caution in recent research from Analysis Mason. It reports that 34% of the SMBs say they have changed their IT provider within the last couple of months. The reason was they just weren’t satisfied with the service levels and the innovation that was being brought to them.
“That it really signals that our customers are becoming more tech savvy and they’re becoming more informed about what’s possible,” said Schoenborn. “And frankly, they’re feeling the pressure to ensure that they have a secure environment protecting their company. So they’re looking to trusted advisors. They’re looking to you to help them through … multiyear roadmaps on how they’re going to realize value.
“They’re also looking for industry expertise, for those who might have a specific niche that can help them with compliance and regulatory requirements. But bring to the table specific ISV solutions that are going to help them to grow. And finally, they’re looking for skilling. Roughly 90% of professionals today will require some basic level of knowledge around digital technologies. But around 23% of SMBs have that kind of training available to them. It’s clear to say that they need our help,” she noted.
However, the exec offered a word of caution in recent research from Analysis Mason. It reports that 34% of the SMBs say they have changed their IT provider within the last couple of months. The reason was they just weren’t satisfied with the service levels and the innovation that was being brought to them.
“That it really signals that our customers are becoming more tech savvy and they’re becoming more informed about what’s possible,” said Schoenborn. “And frankly, they’re feeling the pressure to ensure that they have a secure environment protecting their company. So they’re looking to trusted advisors. They’re looking to you to help them through … multiyear roadmaps on how they’re going to realize value.
“They’re also looking for industry expertise, for those who might have a specific niche that can help them with compliance and regulatory requirements. But bring to the table specific ISV solutions that are going to help them to grow. And finally, they’re looking for skilling. Roughly 90% of professionals today will require some basic level of knowledge around digital technologies. But around 23% of SMBs have that kind of training available to them. It’s clear to say that they need our help,” she noted.
NERDIOCON — There is a $420 billion untapped opportunity for MSPs in the small and medium business (SMB) space, according to Microsoft.
Sharon Schoenborn, corporate VP, North America, Small, Medium and Corporate (SMC) at Microsoft addressed MSPs at NerdioCon 2023. Channel Futures is there this week.
“We see the opportunity in the SMB space has been significant,” she said to the crowd in Cancun, Mexico. “It is one of the fastest growing cloud businesses from Microsoft globally. The TAM [total addressable market] as we see right now is $420 billion.
Moreover, 66% of customers plan to increase their IT budgets over the next year. Schoenborn (pictured on stage above) calls that an encouraging sign.
“There’s been a ton of change for small and medium businesses over the last few years,” she said. “And it is great we’re entering into a new growth phase with small and medium businesses. Small medium businesses are the lifeblood of our economy. They’re the lifeblood of our communities.”
Schoenborn highlighted what’s driving the market, where SMBs are spending their IT budgets, and what SMBs are looking for in an MSP. See the slideshow above to find out more.
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