SMBs to Increase Spending on Technology in 2023, Says Analysys Mason

Small and medium-sized businesses will increase their spending on technology in 2023. That’s according to technology consulting and research firm Analysys Mason.

The organization predicts SMBs will be confident in business performance, despite economic challenges. Additionally, Analysys Mason’s predictions point to a shake-up in how vendors and the reseller channel sell to SMBs. Its research has found that one in three SMBs plans to switch channel providers to gain enterprise levels of service and support.

Expect the 145 million SMBs worldwide to spend $1.45 trillion on IT in 2023. Approximately 40% will be from the Americas, 30% from Europe, the Middle East and Africa and 30% from Asia Pacific. The post-pandemic trend toward digital transformation drives this spending. This represents a growth of 6.3% compared to spending in 2022, down from 7% year-on-year growth that was expected before the pandemic. This is due to the impact of inflation and economic uncertainty. The predictions are based on the data in Analysys Mason’s “SMB Technology Forecaster,” which provides insights into SMB spending in 132 technology categories in 52 countries.

Pre-Pandemic Spending

Analysys Mason’s Bob Takacs

Bob Takacs is research director at Analysys Mason.

“SMB technology spending is gradually getting back to pre-pandemic levels,” Takacs said. “While there is concern about the broader economic environment, SMBs have a high degree of confidence in their own businesses given that they pulled through the pandemic successfully and are focused on how they can be more effective and set up for growth. They are looking for managed services and solutions that enable them to do that, without having to manage their own IT environments.”

SMBs continue to invest in IT, although the decision-making process is taking longer because they are carefully examining the costs and benefits of any new solution. Furthermore, SMB behavior has shifted significantly. As a result, there’s more demand for cloud-based and as-a-service solutions, which has become a key SMB strategy.

The message to technology vendors and resellers is to focus on service and support, while delivering clear messages around the business use cases of technology solutions. SMBs seek simple procurement and installation, tiered pricing and comprehensive support.

2023 SMB Technology Predictions: Ecosystem Transformations

Approximately 37% of SMBs plan to switch channel partners in favor of an “enterprise-lite” experience of support and services. These enable full client life-cycle management such as pre-sales, onboarding, account management, defined touch points and communication channels.

Additionally, SMBs will look to managed service providers (MSPs) for more than IT management. SMBs’ IT spending through MSPs is expected to grow by 11% year-on-year from $279 billion in 2022 to $311 billion in 2023. The need for end-to-end support in managing increasingly complex software stacks and pushing forward digital initiatives drives this spending.

Finally, SMBs will spend more than $66 billion on IT solutions from telecom operators. They will increasingly look to telecom providers for IT advice, support and services. 80% of SMBs would consider taking IT services from operators. Operators create targeted IT services bundles for SMBs and partner with software/service providers. This helps them to reach a broader SMB market.

2023 SMB Technology Predictions: New Spending Priorities

SMB spending will grow for platforms as a service (PaaS), software as a service (SaaS) and PC and device as a service (PCDaaS). SMBs’ spending on platforms-as-a-service (PaaS) solutions should grow by 18% year-on-year from $3.4 billion in 2022 to $4.0 billion in 2023. SMBs demand more flexibility without committing to expensive IT resources. Early adopters will increase their use of advanced analytics tools such as business intelligence (BI) and AI-powered applications. Software-as-a-service (SaaS) spending is likely to grow from $44 billion in 2022 to $54 billion by 2023. This represents a 22% year-on-year growth. SMBs are looking to optimize and automate functions to increase efficiency and improve data utilization. Spending on BI, ERP and line-of-business software such as electronic health records, 3-D design and IT monitoring solutions, will increase rapidly as a result.

Rising energy costs will affect SMBs’ IT spending decisions. SMBs will look for ways to increase energy efficiency and to gain better control of their budgets. This will lead to an increase in the use of IoT-related solutions, such as energy usage apps and smart meters. Finance and expense management applications will also be in greater use.

Lastly, cybersecurity remains a top priority. SMBs will continue to be concerned about cybersecurity thanks to device proliferation and ongoing geopolitical concerns. Spending on cyber-security solutions will increase from $69 billion in 2022 to $77 billion in 2023.