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    2019 Top 10 SMB Business Issues, IT Priorities, IT Challenges
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    US SMB & Midmarket SaaS Adoption
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  • IT MATURITY SEGMENTS RESEARCH

    IT MATURITY SEGMENTS RESEARCH

    Technology adoption trends by IT sophistication
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    SMB & Midmarket Security Adoption Trends
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    SMB & Midmarket IoT Adoption Trends
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Techaisle Blog

Insightful research, flexible data, and deep analysis by a global SMB IT Market Research and Industry Analyst organization dedicated to tracking the Future of SMBs and Channels.

2019 Top 10 SMB and Midmarket business issues-challenges-priorities

Techaisle has released its annual research infographics on top 10 IT priorities, business issues and IT challenges of SMBs (1-999 employees), midmarket firms (100-999 employees) and small businesses (1-99 employees) for 2019. In its detailed SMB survey Techaisle investigated 21 different technology areas and several technology sub-categories, 23 different IT challenges and 21 different business issues. This is the 9th year of Techaisle’s annual survey research initiative that probes for top business issues, IT priorities and IT challenges. Tracking history provides a fascinating evolution in which new business goals drive new IT priorities and uncover challenges that must be addressed to enable progress on business objectives.

Primary research was conducted among senior IT and business decision makers from Techaisle network of 1.2M B2B IT professionals spread across 30+ countries.

There are some interesting differences in IT priorities as compared to 2018. IoT and VR/AR fell below top 10 (but still within top 15) and replaced by Voice/Digital assistants as well as Open source solutions. Across all regions (US, Europe, Asia/Pacific, Latin America) digital unified workspace and software-defined are becoming a priority for both SMBs and midmarket firms. Security many places within the top 10 IT challenges in different forms – cloud security, mobile device security, data protection/recovery/business continuity – with Cloud security as the top IT challenge.

Global SMB & Midmarket IT spend (excluding telecom services) in 2019 is projected to be US$665B and corresponding cloud spend is expected to be US$115B. Research also found that IT budget growths in 2019 will be the highest in Asia/Pacific (6.2%) and lowest in Latin America (1.8%). While IT budget constraint is not the top challenge within SMBs in the US and Asia/Pacific, it is the top concern in Latin America.

Managing data growth is continuing to pose challenge for SMBs and when probed further Techaisle research found that only 11% of SMBs and 29% of midmarket firms have evidence-driven culture with data-driven decision-making business processes in which data defines requirements or opportunities and management then determines the best option for moving forward. In the US, 17% of small business and 34% of midmarket firms consider themselves to be innovative.

2019 Top 10 SMB business issues, IT priorities, IT challenges

2019 top10 smb it priorities business issues techaisle infographics low res

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SMB Productivity improvement: finding hard numbers in soft benefits

We know that productivity is a very important business goal for your organization. And that not only employee productivity but also group and organizational productivity is of importance. The IT industry is abuzz with discussion of how to improve productivity – and the number of suggestions is logarithmically proportional to the number of IT suppliers. But you need to find that trusted advisor, an unbiased supplier who can sift through the hype. We know that there is an ongoing change, a shift towards business value & employee empowerment. These refer to the new priorities among SMBs to invest in tools and technologies that allow their users to make better business decisions, improve market reaction time and better serve their customers. In other words, SMB firm leaders like yourself, are looking to improve return on Human Capital as a way forward.

Drilling down beyond the hype – how can you use technology to augment your organizations’ ability to compete tasks and decrease process friction?

Productivity

Techaisle found that SMB business leaders are believers in the connection between technology and productivity: 55% see “creating processes that constitute a better way of doing business” as a key benefit of IT, 57% credit IT with “facilitating better automation of core business processes,” just over half report that IT creates “better coordination across functional areas,” and an even 60% state simply that technology “improves employee productivity”.

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Techaisle Take – HPE vs Dell SMB IT solution stack

Comparing Dell and HPE offerings and ecosystems against the Techaisle SMB IT solution stack model

Techaisle’s latest report is designed to help SMB buyers and suppliers identify IT stack requirements, and to compare the offerings and ecosystems of the two current market leaders, Dell and HPE, against Techaisle’s definition of essential SMB & midmarket business technologies. The report is structured in three parts:

  • The IT stack: the report begins by outlining the technologies that SMBs require – and require integration across – in order to support current and emerging business requirements
  • Vendor comparison: an evaluation of Dell and HPE offerings, including core products, non-core products and partner-delivered capabilities, against the stack requirements
  • Evaluating stack suppliers: advice on how to use the stack comparison, and additional Techaisle research findings, to evaluate Dell and HPE strengths
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SMB market is not a monolith – 32 percent are in Advanced IT sophistication segment

  • ‘The’ IT market is comprised of many segments: large enterprises act at a different pace than SMBs.
  • The ‘run rate’ revenue in the IT industry is attributable to products that are mature, accessible to buyers in all segments.
  • In many cases, the IT industry focuses on new product categories (e.g., IoT) appealing to sophisticated buyers as growth drivers.
  • For the most part, adoption begins in large accounts, and ‘filters down’ into SMBs over time.
  • Techaisle research demonstrates that the SMB market is not a monolith – and provides the insight needed to understand advanced IT adopters within the SMB community. And trend analysis serves as an important illustration of the impact that IT’s relentless progress has on different buying segments within SMBs

IT products are often described as having ‘a market’ – but ‘the’ IT market is comprised of many segments, each of which has its own approach to IT adoption. Some industry sectors (e.g., aerospace) tend to move faster than others (e.g., retail); large enterprises tend to adopt technology earlier than SMBs; and different countries and regions invest in new technologies at different rates.

Unless/until they are supplanted by new solutions, mature IT products (e.g., printers, desktop computers) are acquired at about the same rate by all buyers: large enterprises, SMBs, and various industries all have well-defined needs and acquisition patterns for these technologies. These technologies generate the majority of ‘run rate’ revenue in the IT industry.

When IT industry growth opportunities are discussed, the focus often turns to earlier-stage technologies – witness current enthusiasm over IoT, analytics/Big Data and cloud. Sellers of these technologies tend to focus on advanced segments (large accounts, particularly in leading-edge industries). SMBs are generally viewed as a secondary market. 


IT sophistication segmentation

However, the SMB market is not a monolith. Techaisle research, SMB & Midmarket IT Sophistication driven technology adoption trends has identified four attitudinal/behavioral segments that have different approaches to IT adoption. Suppliers who understand the scope and characteristics of these segments are able to expand their target markets and develop strategies geared to reaching high-potential SMB prospects. These suppliers ultimately have access to an expanded TAM, and have the insight needed to align marketing investments with priority customers. Sophistication is a crucial issue in SMB technology adoption – but it is often overlooked, and even when it is not, it is poorly defined and quantified. This report provides the insight needed to align SMB targets and strategies with highest-potential segments.

techaisle smb it sophistication segments

The above chart provides a high-level illustration of the four IT sophistication-defined buyer segments found within the SMB market. The first group, “Pre IT,” represents firms – all of which are found in the small (1-99 employees) rather than midmarket (100-999 employees) market – that have not embraced IT as part of their business operations.

The second group, “Basic IT,” is the largest of the four segments, and most closely resembles the approach that is commonly thought of as ‘the SMB IT market’. These firms invest in mature (run-rate) technologies, but lack the internal business demand and IT understanding to expand into more advanced solutions. In the small business market, Techaisle categorizes these firms as “old-fashioned yet entrepreneurial” – firms that are not sophisticated in their use of IT, but who will buy proven solutions to address clearly-defined impediments to business success. In the midmarket, Techaisle classifies these organizations as “proactive yet cautious” – committed to investment in technologies that have been proven to enhance individual productivity or firm-level capabilities.

The third group, “Advanced IT,” represents the approach that is often considered to be characteristic of leading-edge SMBs. These firms are actively exploring advanced solutions: ‘second-order’ applications (such as analytics and ERP) that build on the more basic capabilities that are already deployed within the organization, and emerging applications (such as IoT) that provide entirely new, IT-enabled expansion opportunities to their businesses.

The fourth group, “Enterprise IT,” functions like the IT operations within large accounts. In an SMB context, Enterprise IT refers to organizations where IT is run as a business, providing support for IT-enabled innovation across all functions and processes. This group, which is found only in midmarket accounts, represents about 17% of the SMB market total.

Technology progress creating segment separations

Comparing the latest 2017 analysis with similar segmentation analysis conducted in 2015, we see that in 2015, 10% of small businesses were classified as Pre-IT, 59% as Basic IT, and 31% as Advanced IT. Over the next two years, IT complexity spiked at a historically high rate: cloud and mobility went from PoCs to essential infrastructure, analytics (and increasingly, Big Data) moved swiftly from early adopter to early mass market status, IoT is rapidly following this path, AI is migrating from science fiction to data centers, and entirely-new options like Blockchain are having real impact on IT strategy in advanced IT environments. Against this backdrop, small businesses see that their capabilities are not adequate for this increasingly-complex world: nearly 70% are in the “Basic” category, and the proportion that can claim to be “Advanced” has halved, from 31% to 16% and the Pre IT has increased.

At the same time, analysis shows that more sophisticated segments are able to grow with this expanding constellation of options. One-third of midmarket businesses were categorized as “Basic” in 2015; by 2017, this group had shrunk to just 11% of midmarket firms. At the same time, midmarket firms boasting “Enterprise” level capabilities grew from 14% to 37% of midmarket organizations.

Taken together, the data illustrated in the research reinforces the need to understand ‘the SMB market’ at a more detailed level. The ability to identify buyer segments within this dynamic environment is critical to a supplier’s ability to adequately scope and target SMB opportunity.

 

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