Small and medium-sized businesses have been a central focus when it comes to digital transformation, as these firms tend to have the most to gain from novel technologies and services. Additionally, when companies have been in operation for five years or more, they are notorious for having systems and processes in need of massive overhauls. For example, paper-reliance is common in the accounting departments of many SMBs even today, while mobility and analytics are not as commonly used among these businesses as larger ones.
However, much is changing going into the new year, as it appears SMBs are getting on board with more advanced technologies ranging from transaction automation and paperless billing to analytics, mobility and beyond. At the same time, these companies do not typically have a fully staffed IT department, meaning that the implementation of advanced technologies can be inefficient, challenging and sometimes even impossible.
Luckily, a new report found that SMBs are getting around these impediments and still putting solutions into place.
"SMB technology spending is booming."
Breaking down spending
International Data Corporation recently forecast managed services to represent the highest amount of growth between 2015 and 2020, expanding at a compound annual growth rate of 7.4 percent. Software took the second position at 6.6 percent CAGR, IT services fell in to third at 3.8 percent, while hardware is only expected to grow 1.1 percent through the end of the decade.
Perhaps not that surprisingly, overall spending on technology products and services is burgeoning in the big picture, and is expected to expand at a CAGR of 4.2 percent between 2015 and 2020. Content management applications have been among the most common purchases in 2016 and are projected to continue to take up a relatively large portion of SMB technology budgets in the coming years. As a note, outsourcing of both business processes and IT management have grown immensely thanks to the rise of what IDC calls the Third Platform, or novel technological trends such as the Internet of Things, mobility and advanced analytics.
"The Third Platform has disrupted traditional IT markets and how large organizations deliver IT services," IDC Customer Insights and Analysis Vice President Chris Chute said. "For SMBs, the result has been largely positive: a stronger ability to compete with larger firms, more easily enter new markets, more quickly develop new products, and drive higher levels of employee productivity. Over the next three years, we expect IT solutions to drive business outcomes, and in turn further close the competitive gap between SMBs and enterprises."
Notably, this study was a global one, but the United States is a leader in IT spending among SMBs, the analysts stated. The nation is forecast to represent $168.7 billion of the $668 billion total spent by SMBs around the world, and IDC predicts the U.S. will have a 30 percent market share through 2020.
Stepping into the future
Outsourced solutions and managed IT services have been among the most powerful drivers of technological transformation among SMBs because they negate the need for highly experienced and skilled tech workers within the business. These services can come in handy for a range of projects, including automating and optimizing the accounts payable and receivable departments, streamlining workflow management and integrating all systems to create a central database that stores corporate information.
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