Small Business Market Adds Up to a Big Opportunity for Savvy IT Firms

As Dwight Schrute would say, “Fact: the small and medium size business (SMB) sector is critically important to the US economy.” With the daily financial news dominated by movements in the Dow Jones Industrial Average or earnings reports from the big guys, it’s sometimes easy to forget the true significance of the SMB market. Consider for a moment: the 30 companies comprising the Dow, a proxy for “the market,” employ about 7 million workers. In contrast, the SMB market (<500 employees) employs nearly 10 times that many (about 60 million according to the US Census Bureau) and yet it seldom receives the same attention.

Most IT firms serving the SMB market readily acknowledge that the sector presents both opportunities and challenges. CompTIA’s recent research study, Third Annual SMB IT Spending Trends, explores a number of issues related to these opportunities and challenges. Note: CompTIA members can access the full report at no charge in the member-only area of CompTIA.org.

Here are a few take-aways worth noting:

Many SMBs indicate they face the dual challenge of needing to better leverage technology to stay competitive, increase productivity and innovate, while at the same time, controlling and/or cutting costs. As a result:

•    More SMBs will embrace a software-as-a-service model. Top areas of SaaS interest include: productivity applications (e.g. word processing), accounting/financial applications and business intelligence applications. Although 55% of SMBs expect to increase spending on IT products and services over the next 12 months, pressure to maximize IT ROI will entice many SMBs to explore the full range of IT options available to them.

•    More SMBs will attempt to squeeze additional useful life out of existing IT investments. This often comes with the side effect of higher maintenance costs or the challenges of dealing with legacy systems (26% of SMBs cite this as a key IT issue for the year ahead).

•    More SMBs will turn to a managed services solution to handle their IT needs. Most small firms do not have a dedicated IT department (4 in 10 do not) and among those that do, many face reduced headcount. Moreover, a number of SMBs report IT complexity often sours their opinion of IT investments. For these and other reasons, more SMBS will find the managed services model is a good fit for their needs.

•    SMBs will continue to look for ways to optimize their operations. This may take a number of forms, from utilizing virtualization solutions (1 in 4 expect an investment in this area) to seeking improvements in their customer management (80% cite CRM as strategically important) and business intelligence capabilities.

•    SMBs will continue to utilize mobile and/or virtual office environments as a means to control costs and take advantage of remote talent. Over the next 12 months, SMBs expect to purchase more laptops, notebooks, netbooks and smartphones than traditional desktop PCs. Additionally, 71% of SMBs cited increasing Internet bandwidth/connection speeds as a strategic concern for their firm, a reflection of the mission critical dependence on the Internet among many SMBs.

As you can surmise, 2010 will likely be defined by cautious optimism. IT firms that can provide solutions meeting the dual requirement of helping SMBs control costs while at the same time tapping the full power of technology will be best positioned to excel in the SMB market.