Where are SMEs spending their tech budgets?

A focus on customers and efficiency is driving tech spend among SMEs.
13 May 2019

SMEs are spending big on infrastructure. Source: Shutterstock

Technology is now crucial to success in the hyper-competitive SME world— from marketing automation to data analytics, and CRM to cloud computing, technology is ingrained into and powering every aspect of business today.

And while these businesses may be small— comprising 500 employees at their upper limits, their impact is big. They constitute the majority of jobs in the United States and generate nearly a third of its total exports.

These small, punchy firms are not holding back when it comes to technology investment. In 2018, SMEs surpassed US$600 billion in spend worldwide, and the number will continue to grow by the year.

According to a recent report by CompTIA, SMEs today have a “flirtation-turned-relationship” with the technology business driven by some key priorities.

Customers first

For most SMEs, business is built around the customer. Losing market share or failing to build a pipeline of new prospects is not an option, so it makes sense that technology spend to this end is most significant.

Among SME leaders in the study, identifying new customer segments and new markets was the highest priority (45 percent).

Beyond new customer acquisition, however, another four in 10 said it was critical to catering to existing customers. Renewing accounts, and pushing new products and services, in this segment were prime targets.

Improving efficiency

While the customer may come first, efficiency comes second. Whether this comes down to spending on new systems, or enhancing those already in operation, efficiency will impact all areas of business.

Affecting workforce productivity, cost, revenue performance, and customer experience, efficiency was the top priority for IT staff (48 percent), among innovation, new product launches and hiring top talent.

Turning to tech

In order to achieve these objectives, nearly two-thirds of SMEs (64 percent) say they are turning to an investment in technology.

The report found that the average company spends between US$10,000 and US$49,000 per year on technology. But over half of respondents believed their spend was too little.

In the last two years, 36 percent of SMEs said that their budgets had been focused on infrastructure, including laptops, desktops, phones, servers and storage. Industry-specific software also ranked highly (31 percent), while 30 percent had spent in both areas.

In terms of priorities, 23 percent said customer experience was ranked as their chief concern, but more than one third (35 percent) also said hiring skilled workers was key to driving new tech initiatives.

Emerging tech

More than half of the SMEs in the study (53 percent) believed emerging technology— whether that’s Internet of Things (IoT), artificial intelligence (AI), or even drones— could provide new opportunities for their business.

Nearly a third (30 percent), however, said they were already underway with implementing emerging tech.

Key use cases included productivity (53 percent), customer demand (47 percent), innovation (42 percent), sales boosts (42 percent), competitive differentiation (39 percent), and to avoid obsolescence (22 percent).

That said, 23 percent said it was “too early” to determine the impact of emerging tech on their business, and 10 percent said it could have a negative impact.

The final trend to note was that SMEs are increasingly offering tech as a service or product offering to their customers.

The CompTIA report found, for example, that 52 percent of professional services companies (such as marketers or accountants) had offered tech services to customers in the last year, including reselling software or providing audits, for example.

Just below a third, meanwhile, were considering doing so— while nearly half of those who offered these supplementary tech services said revenue from this is growing faster than the rest of the business.