SMB’s IT Spending to Grow by 6.3%, Touch $1.46T In 2023

Analysys Mason predicts that SMB IT spending is set to grow 6.3% year-over-year in 2023, a rate equivalent to pre-pandemic levels.

August 17, 2022

Small and medium businesses (SMBs) have an air of optimism surrounding them despite current economic, financial, and geopolitical uncertainties. According to research by Analysys Mason, SMBs expenditure on IT solutions and services is set to grow 6.3% year-over-year in 2023, a rate equivalent to pre-pandemic levels, and will touch 7.4% by 2025.

In absolute terms, IT spending by SMBs is predicted to grow to $1.466 trillion by next year. Additionally, data from the technology, media, and telecommunications management and consulting firm indicates a positive outlook, at least between 2022-2027, where SMBs will register a compound annual growth rate (CAGR) of 7.5% in terms of IT spends.

The reportOpens a new window , SMB IT spending 2022: New 5-year Priorities, Insights and Opportunities, by Analysys Mason paints a different picture than Gartner’s July 2022 report that predicted a 3% growthOpens a new window in the overall IT spend in 2022. However, Gartner’s prediction is based on the overall IT spend and not just SMBs. So SMBs may be more likely to shell out cash on IT solutions than enterprises in terms of percentages.

Preliminary results from a study by Spiceworks Ziff Davis of IT decision makers also indicate that 51% plan to increase year-over-year IT spending despite 86% of respondents believing we are on the cusp of a recession. Only 6% plan to decrease their IT spending. Moreover, the following chart depicts how IT budgets are expected to change over the next couple of years.

Expected-IT-Budget-change-chart

Source: SWZDOpens a new window

Analysys Mason said a significant chunk of SMB IT spending would be via managed service providers (MSPs) and systems integrators (SIs). While traditional resellers get the most SMB IT business (44%), MSPs and SIs are rapidly catching up with a 12% CAGR compared to 8% of resellers. This equates to a 1% decline in resellers’ share until 2025.

See More: Top Tips To Make Your AI Spending Count and Scale Your Business in 2022Opens a new window

SMB IT spending by channel, worldwide, 2021–2025

Global SMB IT Spending by Channel 2021–2025 | Source: Analysys Mason

“The relationship between SMBs and their channel partners is evolving as SMBs seek support beyond IT purchases. SMBs are expected to prefer channel partners that can provide strategic guidance on how IT can help them to grow their businesses and increase revenue,” Analysys Mason said.

Which IT solutions will SMBs adopt the most?

SMB spending on collaboration solutions will slow down in 2022-2023 but will continue to remain the highest. The spur in collaboration tools was brought on by COVID-19-mandated remote work. Still, since organizations have already adapted to their needs, they will now focus on IT investments that drive transformation and growth.

This includes business applications, with two-thirds aimed at software-as-a-service (SaaS), cybersecurity (primarily network security), infrastructure (mainly cloud), and digital marketing and advertising to find new revenue streams.

Year-on-year growth in SMB IT spending by solution

Global YoY Growth in SMB IT Spending by Solution Category in 2022 and 2023 | Source: Analysys Mason

Bob Takacs, research director and SMB IT practice leader at Analysys Mason, said, “Our latest forecast reveals the shift in SMBs’ behavior and priorities since the pandemic. We see increased investments in categories driving resiliency and efficiency. This includes categories such as managed services, infrastructure and cyber security.”

“This is an important release because we accounted for the impact of three critical drivers including SMB’s changing behaviors post-pandemic, macroeconomic headwinds and the global political unrest. Given these impacts to the ecosystem, this release will be an essential tool for business leaders to help them to drive and protect their SMB revenue.”

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Sumeet Wadhwani
Sumeet Wadhwani

Asst. Editor, Spiceworks Ziff Davis

An earnest copywriter at heart, Sumeet is what you'd call a jack of all trades, rather techs. A self-proclaimed 'half-engineer', he dropped out of Computer Engineering to answer his creative calling pertaining to all things digital. He now writes what techies engineer. As a technology editor and writer for News and Feature articles on Spiceworks (formerly Toolbox), Sumeet covers a broad range of topics from cybersecurity, cloud, AI, emerging tech innovation, hardware, semiconductors, et al. Sumeet compounds his geopolitical interests with cartophilia and antiquarianism, not to mention the economics of current world affairs. He bleeds Blue for Chelsea and Team India! To share quotes or your inputs for stories, please get in touch on sumeet_wadhwani@swzd.com
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