SMBs Grow Slowly in Traditional IT, but Innovative Technologies Will Drive Spending

A new study from IDC highlights IT spending trends by size class in Western Europe. The study, Western Europe SMB IT Spending Forecast, 2016-2020, shows that IT spending in Western European SMBs will exceed $130 billion by 2020. The SMB segment represents a third of the total IT market, despite the relative fragility of smaller companies and their relatively small IT budgets. There will be a downward trend at the start of the forecast period that will bottom out in 2017, but then IT spending will start to increase, albeit slowly.

The study segments IT spending forecasts into three main company size bands: micro-enterprises (1-9 employees), small businesses (10-99 employees), and midmarket companies (100-499 employees). Large enterprises (employing 500 employees or more) are only considered in the study to allow comparisons with the large enterprise segment and with the total IT market. Small businesses are the most dynamic in terms of growth among the three main size classes, with a 2015-2020 CAGR of 1.7%, while micro-enterprises are the weakest link, with a 2015-2020 CAGR of 0.8%, as they usually have less budget to invest and are more risk-adverse compared with bigger companies.

Nevertheless, traditional IT usually grows more slowly, while innovative technologies are proving to be drivers of growth also for SMBs. "The role of the Internet of Things, digital transformation, cloud, 3D printing, and robotics combined with cognitive systems are creating new channels of investment directed at SMBs. One of the main priorities for vendors is to design a strategy to better target the SMB segment," said Carla La Croce, research analyst, IDC European Industry Solutions, Customer Insights and Analysis.