It’s the little things

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Billy

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16 February 2018 | 0

Billy MacInnesIt might get lost among all the concentration on the likes of Apple, Google, Facebook and Microsoft, but whatever the impact of the large multinationals on the Irish economy, the plain fact is that this is a country of small businesses. Very small businesses. An oft quoted statistic from the Central Statistics Office is that more than 99% of businesses in Ireland are small and medium enterprises and over 92% employ less than 10 people.

So anybody in business in Ireland knows that small and medium businesses are a very important part of the fabric of the economy, generating just under 48% of total turnover in the business economy in 2015.

The good news is that, according to IDC, global IT spending by SMBs and SMEs is expected to benefit from healthy growth over the next three years with a predicted compound annual growth rate of 4.7%.

According to IDC, companies with 10-99 employees are likely to see spending growth of 4.7% and 100-499 employee businesses will have a growth rate of 4.8%. The good news from an Irish perspective is that the core group of businesses that make up so much of the market here – under 10 employees – is forecast to have growth of 5.2% in 2018.

Global spending for this group will amount to nearly $51 billion this year (that figure will be $56 billion by 2021). while $50.8 billion sounds like a lot of money, it’s only 22% of the $229 billion expected to be spent by businesses with 100-499 employees and 28% of the $182 billion that larger businesses with 500-999 employees are predicted to spend.

The two biggest spending priorities for under 10 employee businesses, according to IDC, will be devices (primarily notebook PCs, smartphones and printers) and applications (particularly financial and CRM apps). So it looks like hardware isn’t going away just yet. In fact, IDC expects hardware, software and services to each account for around 30% of total SMB spending in 2018 and business services to provide the other 10%.

Nevertheless, hardware is expected to decline as a share of spend in the next three years with spending on software expected to overtake it next year and IT services predicted to take more share than hardware in 2021.

It will be interesting to see how that overall figure for SMB adoption of IT services is reflected in the under 10 employee category. The suspicion is that the rate of adoption will depend on the options available to companies in that category. Given their preponderance in the Irish economy, it is to be hoped the attention of vendors and partners is not diverted by the much smaller number of bigger, more glamorous organisations.

It’s easy to see why they might be, though, given that so much turnover in Ireland is generated by a small number of very large businesses. Nevertheless, with so many resellers likely to fall into the under 10 employee category, the most realistic opportunities for them are still to be found in customers that are similar in size. They’re in a very strong position to deliver software and services to them because they can understand and identity with businesses that are the same size as they are.

When people use the terms SMB and SME, it can be easy to overlook the small and concentrate on the medium. But in Ireland, small really does come first.

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