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December 01, 2016

SMBs Buying IT at Fever Pitch

 Anyone who's ever run a small business, or been a part of one, knows how important information technology (IT) is to that small business. Indeed, it's not that much different for the entire small and medium-sized business (SMB) market, as a recent study from the International Data Corporation (IDC (News - Alert)) revealed. 

The study found that IT buying in the SMB market was likely to reach a frenzy over the next few years, and by 2020, will reach a cumulative level of about $668 billion. That may sound huge, but SMB spending on IT is already elevated; just this year, companies are expected to spend a combined $564 billion, which will mean a compound annual growth rate (CAGR) of 4.2 percent.

Many of the traditional SMB advantages, the report notes, are only augmented by the proper use of IT. Greater agility, the ability to enter completely new markets with relative ease, the ability to rapidly develop new products to address market needs, and the like are all made better by the  correct application of IT systems.  Both hardware and software will see investment on the rise, as well as IT services in general, as companies look to find the exact mixes to fuel a system.  Hardware will see the slowest growth rates, though, with services growing faster and software growing fastest of all.

Reports also note that medium-sized businesses will be the largest market, as 38 percent of the worldwide market will go in that direction. Much of the rest of the field will be split almost evenly by large businesses and small businesses. Geographically, the United States will be the largest market at $168.7 billion in spending in 2016, and will hold about 30 percent of the market throughout. Western Europe and the Asia-Pacific region excluding Japan will step in as the next two largest, respectively.

Reasonable enough; after all, hardware is usable over a several-year period. Even those who replace a smartphone every year still spend a year with that phone, though they may change apps several times. Software and services are more fluid developments that are upgraded and tossed aside as needs require. Hardware is the fairly static bedrock on which these changes take place. Small businesses may buy in smaller quantities, but there are more small businesses than there are large, so in the aggregate, we're talking about two similarly sized markets.

Businesses will continue to use IT products and services for years to come, no matter what size business we're talking about. As more data requires more processing to produce better results, the need for the right tools will only gain. That means a lot of value ahead in this market.

Edited by Alicia Young

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