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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.

COVID-19 Impact on Global SMB and Midmarket IT Spend

The Covid-19 threat to the global economy and to the IT industry is potentially as bad as, or worse than, the health impact. A global workforce that cannot collaborate effectively cannot deliver products that rely on timely supply of components from far-flung suppliers, and cannot create and implement complex solutions. The necessary isolation used to contain Covid-19 has a devastating effect on economic activity. Manufacturing does not work when people don’t. Chinese exports fell by 17.2% in January/February of this year. The impact on solutions is harder to quantify, but may well be even greater. However, with the slowing number of new cases in China, 80% of manufacturing plants have restarted with about 60% capacity which may restore supply-chain balance by addressing supply-side constraints. The freight (including trucking) and air-cargo routes between China and Asia is returning to normal but China-Europe and China-US routes may be impacted until the middle-to-end of Q2. 

Globally SMBs IT spend in 2019 was $662B with a projected spend of US$700B in 2020, a growth rate of 5.6%. It is natural, in the current economic situation to pare down these spends and slice expectations (perhaps deeply) based on beginning-of-the-year projections. As compared to the original SMB IT spend growth rate, the projected growth rates may drop from a low of 29% to a high of 84% depending upon Techaisle’s optimistic to gloomy scenarios, resulting in revised growth rate ranges from 4.0% to 0.9%. 

SMBs are a good indicator to measure the pulse of economy in any country as they constitute over 90 percent of global businesses. They are intricately linked to large businesses, government departments and educational institutions as both suppliers and customers. A large percentage of consumers rely on SMBs for products and services that they consume within their households. Technology plays an important part in daily operations of SMBs across all departmental functions including sales, marketing, operations, finance and customer support. SMBs form the essential thread of the economic fabric of any country and to a great extent their fortunes and investment capabilities are dependent on the economic situations and policies of the countries where they operate. In a downturn and uncertainty the investment capacity of SMBs is deeply affected. Techaisle conducted a global survey of SMBs to assess their investment intent which combined with Techaisle global SMB IT spend data presents four scenarios - Ideal, Optimistic, Pessimistic, Gloomy. 

Download to read full analysis and projected small business and midmarket IT spend growth rate scenarios.

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2020 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 2020. In its detailed SMB survey Techaisle investigated 27 different technology areas and several technology sub-categories, 25 different IT challenges and 24 different business issues. This is the 10th 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 1.8M B2B IT professionals spread across 30+ countries.

WW SMBs are expected to spend US$1 trillion on IT in 2028, growing at a faster rate than the enterprise segment. Innovation is increasingly becoming a line-item of IT budgets. 40% of midmarket firms and 15% of small businesses are carving out budgets specifically for technology-driven innovation. But there is a flip-side as well. Within 47% of small businesses and 22% of midmarket firms, IT is not expected to actively drive innovation. As data suggest, nearly half of the SMBs assert that either they do not have the right IT skills or not enough IT staff. However, data does show that move to pay-as-you-use/consumption-based financing is likely to reach an irreversible trend with 14% of SMBs either currently using or planning for it. But a mass-move to only OPEX-based technology acquisitions is still in distant future with 30% of SMBs still preferring a mix of CAPEX and OPEX.

2020 top10 smb it priorities business issues techaisle infographics blog

Download 2020 SMB infographic here

For 2020, data shows that for the first-time customer experience has appeared within the top 5 challenges being faced by IT within SMBs which has a direct correlation to the top business issue of attracting and retaining customers. A direct result of the new challenge and focus is in the increase in plans for adopting integrated CRM and customer service solutions (in some cases replacing one brand of CRM with another), acceleration in use of artificial intelligence and analytics. A small business CEO of a manufacturing firm told Techaisle, “we are planning to purchase more cloud-based applications to save time and effort. See being a start-up, currently we do not use many cloud applications and we know that there are requests from our sales and HR department to purchase additional cloud applications. Right now, we are not using any cloud application for customer service and for evaluating our progress, growth and tackle pain point of our business, we need to be more connected to our consumers. So, we are trying to purchase a cloud application like Salesforce or Zoho that can enable us connect with our consumers for feedback and registering customer support / complaints”.

For small businesses, upgrading to digital marketing and utilizing social media is among the top 10 IT challenges. These small businesses are not only experimenting themselves but seeking external assistance in how best to use major digital platforms like Google and LinkedIn to make their customers aware of the services and products that they have to offer. They are also hoping that such initiatives may help them get valuable feedback from their customers.

Security is not only the biggest IT challenge but it is also a key top priority in every region and across all employee size segments. As one SMB CIO told Techaisle, “security has been our biggest concern. The more we try to deploy latest technologies and software hackers always find new ways to breach. So, we are hiring more experts in our cyber security team and we are evaluating more vendors to have the best software and tools for security”. In fact, US survey data shows that 3% of small businesses and 94% of midmarket firms have employed IT security specialists within their organizations. If data from 1-19 employee size segment is excluded, then the percent of small businesses with full-time cybersecurity staff increases to 25% within 20-49 segment and 57% with 50-99 employee segment. The data is no different in Europe and Asia/Pacific, in fact, the percentages are higher in Europe. A small business IT director in Germany told Techaisle “as our company grows and evolves, security concerns are increasing. There are increasing number of cyber risks and we have plans to implement new security solutions, amending policies and hiring additional security professionals for protecting our organization from any cyber breaches or threats”.

Controlling IT costs, although number nine on the top 10 list is a challenge for SMBs. IT is known to be kinetic, complex and risky and costs can spiral out of control rapidly or SMBs are unable to realize the ROI of the investment in the shortest time. Most SMBs find controlling cost to be a major challenged because there have been situations where their spend was higher than budget allocation resulted in losses. Therefore, SMBs are becoming better on their budget forecasts and moving towards cloud eliminating Capex.

Accelerating cloud adoption is a given but there is a new initiative to consolidate IT workloads. A Vice President of IT in Asia/Pacific elaborated on this topic, “we have a lot of IT workloads that is spread over public and private cloud. It is very important for us to have our data consolidated at a single place that would be a private cloud so that only our internal team has access to it and no one else could access the data without our permission. We have plans to work on private cloud provided by Microsoft Azure and AWS”. There are many other SMBs and midmarket firms who have tasked their IT departments to research and add new cloud technologies based on business requirements.

Hyperconverged Infrastructure (HCI) has moved up in its list of IT priorities driven by the promise of agility, reduced costs, scalability and centralized management. SMBs and midmarket firms are showing their preference for VMware, Cisco and Nutanix HCI offerings.

Cloud-managed SD-WAN service is a new top 10 IT priority for midmarket firms because of faster deployment, optimization of WAN bandwidth and improved operational efficiency due to automation and self-provisioning.

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Updating PCs and software vital for SMB bottom line - says new report

A recent report into the technology purchasing habits of SMBs in the Asia Pacific has revealed that a significant number of businesses are operating with dated PCs and operating systems – which has the potential to damage both productivity and profits.

The Asia SMB Tech Insights Report, conducted in September 2019 by Microsoft and Techaisle, was produced following a survey of 2,000 IT and business decision makers across the Asia Pacific region. The study specifically covered small and mid-size businesses only (up to 499 PCs).

Get the key insights by downloading the summary report for your region:

 Key findings from the report include:

  • Over 1/3 of SMBs are using old PCs (4+ years old) and old Windows operating systems
  • Over half of SMBs have no PC refresh policy (or aren’t following it)
  • Using old PCs can cost a business up to US$2,657 per year
  • 82% of SMBs agree that new PCs can make employees more productive, and 87% agree that new PCs reduce maintenance costs
  • More than 50% of all SMBs in the region experienced security breaches in the past 12 months, and operating with older versions of Windows increases vulnerability
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IT purchase BDM vs ITDM influence within SMB-Midmarket buyer journey

It is clear from Techaisle SMB and Midmarket buyers journey research that both ITDMs (IT decision makers) and BDMs (Business decision makers) play important roles in the (formal and shadow) acquisition of IT products and services. However, Techaisle research has also found that the distinctions between these roles are not evenly applicable across all types of IT-enabled solutions: in some areas, the business will look to IT for leadership, and in others, it will take direction from BDMs.

The positioning of these solutions is important to technology vendor sales and marketing strategies. Solutions in the “IT led” category need to have strong IT-focused positioning, with detailed information on product attributes; this material should be supported with a second layer of collateral containing information on the business case for the solutions, and aimed at BDMs. Solutions in the “BDM led” category require very different positioning: here, vendors need to make a strong case for the business benefits and relevance of the solution and orient these messages towards BDMs, supporting this campaign with accompanying technical information designed to provide clear deployment and integration guidance to ITDMs. The “IT/BDM collaborative” category is the trickiest to address. It requires deep information on business benefits and the process steps required to capture those benefits targeted at BDMs, and deep information on how to assemble, deploy, integrate and support/optimize these solutions targeted at ITDMs – and an understanding of how to position and convey the messages to each audience.

Virtualization is IT-led
In micro businesses, BDMs are reported to provide virtualization solution adoption leadership – but in all other employee-size segments, ITDMs are seen as driving adoption. Within mid-sized business, ITDMs are 2.5 times more likely than BDMs to be leading virtualization adoption, and ITDMs are viewed as having complete responsibility for virtualization solutions in nearly one-third of companies with 100-999 employees.

Managed services is IT-led
Survey responses tell a remarkably consistent story about managed services: accounts in each of the employee-size segments ascribe a rating of 36-42 (out of 100) to ITDMs as of managed services initiatives. This is a natural connection; in general, SMBs adopt managed services to reduce IT labor costs, to free up scarce IT resources to take on other tasks, and/or to provide management of complex technologies, such as services. However, BDMs may also have an interest in managed services, as they often provide access to cloud-based capabilities matched with human IT resources.

IaaS is ITDM/BDM collaborative-led
IaaS is deployed in two very different ways: as a cost-effective means of supporting IT infrastructure, generally sourced by IT, and as a means of supporting the specific (and sometimes, short-term) requirements of a business-led project, often paid for by the business team. The data suggests that the IT use case is more prevalent, and indeed, anecdotal evidence (such as the fact that market leader AWS has a very strong presence within the IT developer community) would tend to support this view. However, there is clearly supplier opportunity in the ‘BDM IaaS’ category as well.

SaaS is ITDM/BDM collaborative-led
SaaS is another category that can affect ITDMs and BDMs, as part of a collaborative initiative or individually. SaaS applications themselves can be seen as belonging to many different categories, including SaaS applications that support IT management functions (such as software development, migration/version management, and IT asset management applications) and applications CRM, ERP, HR/talent management, customer service applications, social marketing, etc.) that are designed to be used by specific non-IT users and departments. Use of multiple SaaS applications adds additional complexity, with the need to integrate and secure multiple data streams; this is likely one reason why IT’s influence over SaaS is greater within mid-market firms (which have a greater variety of users and applications) than within small businesses. Data illustrates, these issues eventually define a category in which BDMs are generally seen as having the primary influence over adoption, but where relatively few accounts (no more than 24% in any employee-size segment, and generally 9%-16%) report that BDMs have sole authority over SaaS initiatives.

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