Gartner Forecasts Big IT Recovery in 2021

We’ve always been interested in helping the local space size its overall market opportunity. As analysts, we’ve done this for years. In the early days, we’d forecast local analog advertising spend. Later, we estimated local online advertising spend. Even later, digital spend. And most recently, SaaS spend by SMBs.

So when we see other forecasts out there we are intrigued and like to look at those forecasts through our local lens. The latest forecast to catch our attention is Gartner’s Worldwide IT spending forecast. Gartner projects global IT spend will total $3.9 trillion in 2021. That’s an increase of 6.2% from 2020. This is a huge increase, especially when compared with an estimated 3.2% pandemic-induced 2020 decline.

We caught wind of this forecast via SaaStr founder Jason Lemkin

Keep it Simple for Small

Gartner expects 2022 IT spending will surpass $4 trillion. In the local space, we’ve been hearing about how the pandemic has pushed millions of small and local businesses to adopt new digital technologies just to survive. We believe small businesses will learn during this period of rapid acceleration that software and digital tools can be hugely beneficial. That is, as long as they are simple to buy, simple to integrate, and simple to use.

Each of these requirements presents its own set of challenges. Does “simple to buy” suggest traditional SaaS models of bronze, silver, gold? Does “simple to integrate” mean with a handful or a bushel full of other software solutions? And which of those integrations are most critical? Is it CRM, payments, marketing, human resources? And what’s the best way to demonstrate usage? Is it the dashboard? Or does the dashboard even exist anymore?

Finding the Local Slice of the IT Pie

Gartner divides its overall IT spend into five categories. Data Center Systems, Enterprise Software, Devices, IT Services, and, finally, Communications Services. While we cannot be sure which of these include spending by small and local businesses, we are pretty confident Data Center Systems and Enterprise Software can be eliminated.

That leaves Devices, IT Services, and Communications Services as the buckets where small business spending would logically land. Taken together these three represent 80% of the $4 trillion spend by the end of 2022. If we safely apply a factor of at least 25% that suggests a small business IT market in excess of $800 billion. For perspective, think about the $130 million Thryv currently extracts from the local small business space for its Thryv Hub offering. We’d show the relative share, but our calculator blows up with way too many zeros. 

It’s safe to say that small and local businesses will spend a pile of money on digital technology and SaaS solutions in the coming years. It is the future of local and small-business. The pandemic has produced permanently higher adoption of remote work and digital touchpoints. And thus businesses need to accelerate their digital transformation plans by at least five years to survive in a post-COVID-19 world. 

Said John-David Lovelock, distinguished research vice president at Gartner, “COVID-19 has shifted many industries’ techquilibrium, Greater levels of digitalization of internal processes, supply chain, customer and partner interactions, and service delivery are coming in 2021, enabling IT to transition from supporting the business to being the business.”

We couldn’t agree more. And we also believe this statement is as true for small, local business establishments as it is for large enterprises. 

Stay ahead of the curve and get the latest on Local straight to your inbox.

By submitting this form, you agree to receive communications from Localogy. You can unsubscribe at any time.

Related Resources

Snap and Gannett Partner to Connect SMBs to Gen-Z

Print and digital media publisher Gannett announced today that it has partnered with Snap Inc.. to distribute Snapchat ad products to SMBs.  Snapchat is uniquely positioned to connect SMBs and Gen-Z, while Gannett has the last-mile sales reach.

big commerce

Walmart Beefs Up Online Marketplace

Walmart has Amazon in its crosshairs. Its latest move came with the recent deal with BigCommerce to boost product libraries and become more of a one stop shopping destination.