Mature SMBs recognize value of linking software investments to business processes
While small and medium businesses are still behind large businesses when it comes to IT spending, mature SMBs already recognize the value of linking software investments to business processes. Thus, global SMB software spending will surpass that of hardware in 2018, upending traditional IT spending habits.
“By the end of the forecast, we expect most midmarket firms will be on a path to embrace digital transformation," said Christopher Chute, vice president, Customer Insights and Analysis, International Data Corp.
In a newly published update to the “Worldwide Semiannual IT Spending Guide: Industry and Company Size,” IDC noted that in terms of company size, more than 45% of all IT spending worldwide will come from very large businesses (more than 1,000 employees) while the small office category (businesses with 1-9 employees) will provide roughly one quarter of all IT spending throughout the forecast period.
Spending growth will be evenly spread with the medium (100-499 employees), large (500-999 employees) and very large business categories each seeing a CAGR of 4.3%.
"Changing SMB attitudes regarding the importance of technology investment cut across company size and region categories. Small and midsize firms in developing geographies are just as interested in leveraging technology as those in developed regions. This sets the stage for spending growth everywhere, especially in midsize firms," added Ray mond Boggs, program vice president, SMB Research.
IDC estimates that global IT spending will grow to nearly $2.65 trillion in 2020. This represents a compound annual growth rate (CAGR) of 3.3% for the 2015-2020 forecast period.
Worldwide revenues for information technology (IT) products and services are forecast to reach nearly $2.4 trillion in 2017, an increase of 3.5% over 2016.
Industry spending on IT products and services will continue to be led by financial services (banking, insurance, and securities and investment services) and manufacturing (discrete and process). Together, these industries will generate around 30% of all IT revenues throughout the forecast period as they invest in technology to advance their digital transformation efforts.
The telecommunications and professional services industries and the federal/central government are also forecast to be among the largest purchasers of IT products and services.
The industries that will see the fastest spending growth over the forecast period will be professional services, healthcare, and banking, which will overtake discrete manufacturing in 2018 to become the second largest industry in terms of overall spending.
Meanwhile, more than 20% of all technology revenues will come from consumer purchases, but consumer spending will be nearly flat throughout the forecast (0.3% CAGR) as priorities shift from devices to software for things such as security, content management, and file sharing.
Consumer spending on mobile devices and PCs continues to drag on the overall IT industry, but enterprise and public sector spending has shown signs of improvement. Strong pockets of growth have emerged, such as investments by financial services firms and utilities in data analytics software, or IT services spending by telcos and banks.