SMB Spending Grows Faster Than GDP

By Greg McNevin

July 2, 2008: According to recent studies by the New York-based Access Markets International (AMI), small to medium-sized business are splurging on IT and telecommunications, with growth in spending outpacing GDP.

US SMB spending on the two areas increased 6.5 percent in 2007 - three times GDP growth (2.2 percent) and the highest level in years.

AMI names vendor strategies as a significant accelerator of the growth, as they have been more refined and focussed on SMBs over the last few years.

“We’re beginning to observe IT vendors - especially larger, established vendors -transforming themselves to be increasingly SMB-focused,” says Melissa Chong, an Analyst at AMI-Partners. “This applies whether they are creating SMB-specific channel programs, acquiring companies with significant SMB influence or building distinct SMB product lines and ensuing marketing programs.”

The company says that organisations have to transform and restructure, to ensure the proper support groups are in place to address this market growth.

For example, there is evidence that small businesses are increasingly taking advantage of open source and SaaS solutions such as Zoho Office and salesforce.com, and vendors need to be able to move with this.

AMI is also asking how will SMB IT spending be affected during an economic slowdown? It says that like other market segments, SMB IT/telecom spending is tied to the economy, and during an economic slowdown spending will slow too.

That said, Chong notes that “given the market accelerators and healthy variance between SMB IT/telecom spending growth and GDP growth, AMI expects SMB IT/telecom spending to continue to outpace overall GDP growth.”

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