IDC Warns Not to Look to SMB Market for IT Services in 2010

Planning on ramping up your services arm to compensate for the loss in revenue and declining profits? Think again. The cogs of change continue to grind onwards, with IDC forecasting caution will rule spending habits in North America this year. According to their Worldwide Black Book, the hardest pressed will be the small and medium business (SMB) space, which will have challenges funding new IT projects.

SMB’s make up a large share of economic transactions in the US economy – generating approximately 50% of non-farm, private GDP according to the Small Business Administration. While IDC is forecasting an increase in IT expenditures of approximately 3% worldwide, they foresee cautious spending habits remaining.

Despite pent-up demand for upgrades and new applications following the deep spending cuts of the past year, economic uncertainty will combine with capital and credit constraints to inhibit spending in mature economies,” said Stephen Minton, vice president of Worldwide IT Markets and Strategies at IDC. “The engine of global industry growth in 2010 will be in emerging markets, in particular China and India, where IT spending will recover much more quickly.” …

But spending will continue to be cautious and, in contrast to the emerging markets, the SMB sector will struggle to fund new IT initiatives.

With market research firms such as Lyra Research and Photizo Group sounding the death knell of our industry and mass exodus of hardware-centric buying cycles, where are we to turn if not to services?

Perhaps the picture is not so black and white. With an anemic road to recovery predicted and what many business leaders as a very tough market, companies are still spending.

The gradual economic recovery will enable many U.S. organizations to relieve some of the pent-up demand for system and network upgrades following last year’s spending cuts.

While this may not necessarily mean you will receive more hardware sales because of this, it does mean change is afoot – and many companies are still looking to change in order to improve their profitability and survivability!

That said, perhaps you might be attempt to frame all of these data points into a direction rather than a destination. While some may begin to banter around the death of MPS in light of new jargon, BPO (that really isn’t new at all) - the question should be how can we deliver results to our customers?

Neither services nor software are the next big thing - nor is any technology really. What everyone is always driving towards is the end-game – the destination. But your destination has to always be proverbially two steps ahead.

How do you anticipate what your customer needs before they know they need it? Generally, you have to be waiting for them before they catch-up.

Know that your space is going to be tough. Know that your competition is going to be fierce. Be prepared that funding for new projects will be difficult and be creative. It might be scary thinking this way, but isn’t the alternative more so?

Ken Stewart’s website, ChangeForge, focuses on the collision between the constantly changing worlds of business and technology in an information-centric world. Ken serves on the board of the new Managed Print Services Association, an international industry organization seeking worldwide best practices for the managed print services industry. He is also the founder of Seeking the Son. He is always interested in connecting with you.