IDC Predicts SMB Growth in 2007

IDC released its latest report Jan. 31 titled “Worldwide SMB Top 10 Predictions: Market Position Index and Growth Opportunity Ratings by Region,” predicting that the small and midsize business market will experience growth in several areas.

The study from the Framingham, Mass.-based technology research firm examines the SMB market opportunity on a global basis across different regions while focusing on overall trends worldwide that are expected to drive SMB growth, such as IT spending, technology expansion and market expansion.

Raymond Boggs, vice president of SMB research at IDC, says these increases will allow SMBs to stay competitive in a big business world.

“SMBs have an opportunity to excel in providing the kind of ‘high touch’ that is often lacking in large companies,” Boggs told eWEEK. The idea of “high touch” is a level of personalization that makes it seem like the customer is being treated in a very individualized way.

Boggs used the example of CDW, a Chicago-area direct marketer, to explain how SMBs can make it feel they are treating customers with “high touch.”

“CDW gives even the smallest customer the name (or names) of account reps so you always call ‘Fred’ (or whomever) rather than just an 800 number where you speak to whoever happens to pick up the phone,” Boggs said.

IDC said it also believes SMBs will continue to increase IT spending in 2007 with increases of 8.3 percent, and that SMB IT gains in local networking and broadband will pave the way for new platforms in security and storage.

“Increasingly, IT is viewed by SMBs as a way to distinguish themselves from the competition and as a practical matter, both customers and suppliers are becoming more demanding, so providing the same level of support and engagement as the largest enterprises is essential,” Boggs said.

According to Boggs, when it comes to IT, SMBs need to be open to new and innovative partnering opportunities.

Boggs pointed out that major companies have been working together, and SMBs should follow suit.

Examples of large companies that are working together are IBM and SAP, Salesforce.com and Google, NetSuite and Yahoo.

To read more about IDC’s predictions on IT consolidation, click here.

“Timely access to affordable, effective resources will be essential, even if it comes from multiple companies,” Boggs said.

IDC predicted that there will be both business expansion and technology expansion in areas such as Eastern Europe, the Middle East, China and India, and that there will be an increase in investments on local area networks and broadband communications.

“This will actually set the stage for the next trend in SMB technology adoption—the increasing interest in remote access to resources (like software as a service) although we expect that adoption will be on an application by application basis,” Boggs said.

However, IDC reported that the one concern for SMBs could be the prediction that rising energy costs and security concerns will trim SMB economic growth by 1-2 percent even as economies expand.

To combat this problem, Boggs said that SMBs will have to “search for alternative, more energy-efficient ways to provide products and services to customers that will encourage technology investment.”

Though the SMB market is experiencing growth as a whole, SMBs still have to be able to remain competitive with larger businesses; Boggs said SMBs can accomplish this in a few ways.

“Internally, they have to make sure that their operations are as efficient as possible, making use of advanced IT and communications technology and externally, they have to make sure that their contact and support of customers and suppliers is competitive, not only with their local SMB competitors, but with the largest of firms,” Boggs said.

When asked about the future of the SMB market, Boggs said to look for “incremental, gradual change, not wholesale revolution.”

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