Editor’s Note: Carolyn April is Senior Director of Industry Analysis at CompTIA, a nonprofit trade association that issues professional accreditation for the information technology industry.
Is this a fun fact? According to the U.S. Small Business Administration, more than 99 percent of businesses in the U.S. are, by definition, “small” businesses that employ fewer than 500 people. In total, 32.5 million businesses employ 48% of the country’s workforce as of 2021.
Sit on these numbers for a while. Unless you work for a company like IBM or Microsoft, Ford or Procter & Gamble, chances are you spend your professional time in a small to medium business every week. These companies may get far less attention than corporate giants, but in fact, they form the backbone of the U.S. economy.
They are always developing. From a family-run pizzeria with 10 employees to a powerful sheet metal fabrication plant with 400 employees, small businesses have been improving their competitiveness in terms of efficiency, innovation and large sales footprints for decades. How did they do that? Short answer: technology. Whether it’s e-commerce platforms, point-of-sale solutions, robotics, or SaaS-based business applications, the democratization and ubiquity of IT has arguably had the biggest impact on the SMB space. Having technology is no longer a good thing, and technology is a necessity to compete in even the smallest small business.
Many of these companies know this. Consider the following: 62% of respondents to the latest CompTIA study, Technology buying trends for SMEs, says technology usage today is a major factor in achieving its strategic business goals. Thirty-one percent cited technology as a secondary factor in these critical jobs, with only 5 percent calling it a non-factor. This has been another unprecedented and difficult year for the impact and restrictions of the pandemic, which have hit small businesses particularly hard. (Note: The CompTIA sample for this study defines SMB companies as companies with fewer than 250 employees)
For the past two years or so, SMBs that have been primarily defensive are starting to restart their offensive tactics. During the pandemic of the past few years, SMEs have mostly followed suit, doing their best to stay in business, avoid layoffs, and retain customers. But now, the most important business goals for 2021, such as renewing or retaining existing customers and fending off competition, are giving way to activities such as hiring skilled workers and implementing new ideas.
Notably, this return to a strategic mindset sees technology as the enabler and fuel to achieve these goals. Last year, technology initiatives were largely focused on infrastructure, driven largely by the remote work migration that many companies experienced overnight. Buying equipment such as laptops, printers and phones for employees has become critical, while collaboration, video and communications/telecom solutions can better enable virtual work environments. This year, when asked where they would prefer to allocate technology spending, respondents moved from the infrastructure purchase category to innovation and HR investments. For example, 28% of SMEs want to spend their money on technology that promotes innovation, up from 19% in 2021. On the human side of the equation, businesses that say they expect to hire more tech workers and spend more on training and certification this year have grown significantly from 2021. Taken together, the targets mark a break from bunker orbit for small and medium-sized businesses hoping to escape the effects of the pandemic.
In general, these more aggressive business goals appear to be related to their more positive attitude toward the current state of the business. Three in 10 SMEs agree that their company will thrive by increasing revenue and profitability in 2022. That compares with 22% last year. Most companies describe the health of their companies as stable revenue and profit levels, similar to last year (51% in 2022 and 48% in 2021). There was a net 19% increase in the number of people reporting distress this year, down from 29% in 2021.
Sounds like good news, right? Given the global downturn and doom issues in the summer of 2022, this is curious, but also somewhat odd. The SMEs in the study did list macroeconomic issues as a persistent threat to their concerns – persistent inflation, potential recession, supply chain distress, etc. – However, there appears to be a more optimistic approach, likely due to the fact that the pandemic is fading in terms of its day-to-day impact on running stores.
This optimism extends to their views on the company’s current technology budget. About half thought the level of spending was just right, while a surprising 22% thought it was too high. One in four think current tech spending is not enough. The reality is that many of these companies’ strategic goals require a higher level of technology investment than some SMBs realize. Why don’t they know? The main reason is likely to be the fact that the smallest SMBs often operate without a dedicated IT team, which means that many costs beyond the initial price tag of the technology are negligible. These costs include training staff on new technologies, integration efforts required to link new systems or applications with the wider IT environment, and/or steps required to ensure that cybersecurity needs are met.
The gap between spending reality and actual spending needs is a perennial problem for SMEs that constantly manage resource allocation. However, if strategic thinking about business goals and the role technology plays in achieving them continue to evolve as rapidly as they are now, business owners will hopefully realize that committing to further investment will be the key to success and help them fend off another unexpected event. strikes, such as a pandemic.
Note: This blog was originally published on: https://connect.comptia.org/blog/tech-buying-trends-smbs-pinpoint-technology-in-return-to-strategy