At first glance, it seems counterintuitive. With economies around the world facing declining growth and even a recession, a new report from Capitalis shows small and medium businesses are predicting their IT spend on managed service providers and system integrators will grow 12 per cent every year until 2025.
However, many SMBs recognise that remaining competitive, cutting costs, optimising operations and managing changing customer expectations depends on being technologically smart and agile.
As Microsoft CEO Satya Nadella put it, “The case for digital transformation has never been more urgent or clearer. Digital technology is a deflationary force in an inflationary economy.”
Start-ups and digital first businesses are digitally mature and hungry to invest in technology to fuel growth, enhance digital security, empower talent and improve efficiencies. That spells a massive opportunity for digital services providers and resellers, with more than 2.2 million SMBs in Australia and another 550,000-plus in New Zealand.
Small and medium businesses in this part of the world are lucky to have a whole ecosystem of world-class IT services providers, software companies or solutions specialists to help them transform, deliver more and grow, working alongside them every step of the way to ensure they get the best possible outcomes.
Especially in the SMB market, the future holds significant opportunity for managed services providers. But as our latest research shows, the key to unlocking these opportunities is not just to understand where the opportunity sits, but to understand how to evolve to meet the changing needs of customers.
There’s one other thing resellers and service providers need to keep in mind – the fact that around 40 per cent of the survey’s respondents had switched IT services suppliers in the previous 12 months because they weren’t satisfied with the service.
What that means is, winning new business isn’t enough. To retain customers, suppliers need to be really plugged in to their business priorities and wants, and show how they’re continuing to add value beyond that initial deployment or contract period.
How can they do this?
There are some fascinating insights in the report that show what SMBs are looking for in their tech partners. Firstly, more than a third of SMBs (38 per cent) say they need help to understand the business impact of tech decisions or investments, and to compare solutions. Providers who can speak with authority on the differences between tech products and services, and better still, who can analyse what that would mean at a business-wide level, will have the edge. The insight here for IT services companies is not just to know tech, but to understand the business, and ask the right questions to get that knowledge.
We’re seeing more partners investing in specialist services to understand these complexities – but there’s an even bigger opportunity here. For years at Microsoft, we’ve been talking about how diversity, communication skills and analysis are just as important to the tech sector and digital careers as coding or technical knowledge. This beautifully illustrates the point. SMBs are looking for tech partners who “get” their business and can also communicate the impacts of their decisions in a way that’s easy to understand. It makes great business sense for IT businesses to hire (or train) the kinds of people who can do that, and who see the world as their customers do.
It’s about being proactive, not reactive
There’s another statistic from the report that really stands out, which is that more than half (51 per cent) of SMBs want tech partners to proactively recommend new solutions. In other words, if there’s another product or service out there that would help their business, they want to know about it.
In this age of rising cyberattacks, it’s particularly important that tech partners help small and medium businesses understand the risks they’re exposed to. With attacks on major finance companies, education providers and healthcare organisations in the headlines, many SMBs have the mindset that “we’re not big or lucrative enough to bother with”. That couldn’t be farther from the truth. Even pre-Covid, a 2019 global study showed 43 per cent of small businesses had been targeted by cyberattacks. As more SMBs digitally transform, their exposure to risk also increases without the right protections in place. That’s why our new report shows one of the top four priorities for local SMBs is enhancing their digital security.
One of our major distributors, Dicker Data, says that in almost every conversation with their business customers, security has been high on the agenda. They’ve seen smaller partners beat the competition to large contracts across a range of technologies when augmenting their capabilities with the value-added services offered by Dicker Data. Tech partners who can raise awareness around security and the role technology plays in building a robust defence will be in an excellent position to not only add value to those customers, but grow their own businesses as well.
But perhaps what’s most surprising about the Capitalis report is that two-thirds of SMBs have factored ESG (Environmental, Social and Governance) goals into their decision-making, and are actively monitoring or assessing progress. When so many small businesses are struggling against economic headwinds and skills shortages, this is particularly encouraging. At Microsoft, we’ve taken a leadership stance on the environment, pledging to remove all the carbon we’ve ever produced from the environment by 2050 because we know it’s what’s right for the planet and for our customers. And that’s really resonated with customers and partners with their own sustainability goals. Tech partners and resellers who also take a leadership role on ESG will find it’s just what many SMBs are looking for.
The overall picture the SMB study creates is one of huge opportunity for the tech sector, provided IT providers are willing to invest in the right capabilities and adopt a proactive, educational approach to help SMBs understand where their spend will create the biggest impact. Small and medium businesses understand the right investment in the right place will put them in a much stronger position during this economic turbulence – and IT partners with the same outlook will reap the same rewards.
To read the full whitepaper, Securing the SMB opportunity in Australia and New Zealand, click here.