Top Cloud IT Investment Trends for Small and Medium Businesses in 2023

How do the waves of interconnected economic, social, and political disruptions affect small and medium businesses (SMBs)? What key strategies should they be adapting to thrive in such market while still transforming into resilient digital businesses? Global financial challenges have caused systemic changes in the market such as inflation, an IT skills gap, supply chain, labor shortages. To survive and thrive in this environment in 2023, SMBs will need to re-think their business processes, operations, and customer engagement strategies to focus on technology that can unite all of these critical elements.

To remain competitive with larger organizations—or competitors that are more digitally advanced—SMBs will need to increase budgets for IT solutions and connectivity services that drive greater business, operational, and customer agility. There will be a need to invest in a range of technologies to focus on automation, bridging the labor gap, and offsetting skilled labor challenges while reprioritizing to what drives the mot business value.

In this blog post, we cover five key technology directives that SMBs should focus to thrive and succeed in this emerging digital market. We used analyst firm, IDC, as our source for many of these and provided specific takeaways for those contemplating moving more workloads to the cloud.

Prediction 1: By 2025, 30 percent of SMBs will shift half of their core workloads to the cloud to drive business agility and future resilience

Cloud will no longer be considered a location just where data is stored and accessed, but rather an operating model. SMBs will leverage the agility provided by cloud to quickly deliver at scale on rapidly changing requirements from internal and external stakeholders. While cloud has become a norm in the recent past, we will see an increased trend of in-house IT teams developing new cloud-centric models to ensure seamless adoption of new services such as: purpose-built data stores and performance-intensive computing

SMBs have been largely adopting cloud to reduce capital expenditures and drive efficiency, whereas larger organizations are looking to derive greater value from modernizing applications and infrastructure, launching new digital products and services, and adopting new technologies, such as AI and ML.

Organizations that do not have in-house IT talent can use tech partners—such as the AWS Partner Network—to build their solution in cloud or adopt more customer-centric thinking and procure solutions for operations, too.

We also see an increased trend of SMBs using cloud usage for Software-as-a-Service tools (accessing licensed software online via subscriptions) and file sharing. Top uses include:

• Online backup and storage
• Payroll and human resources platforms
• Virtual/remote desktops
• Customer support and/or helpdesks
• Customer Relationship Management (CRM)

Prediction 2: Everything as a Service

Considering the macroeconomic condition, cost is a major concern for most SMBs in the foreseeable future. Because of this, SMBs will leverage the most important benefit from subscriptions as a service (aaS): only paying for what they need.

The term “aaS” can be described as the usage of anything as a service. You might familiar with SaaS for instance (referenced earlier in the blog post). The idea of aaS encompasses products, tools, and technologies that vendors deliver to users as a service over a network— typically, the internet—as an alternative to providing them locally or on-site to an enterprise. Adopting aaS will result into significant and sustained reductions in operational burdens and much faster access to innovation. We predict IT will be among the most transformed as they adopt as-a-service delivery and operating models over the next 12 to 24 months. According to the IDC report earlier in the blog post, 40 percent of IT budgets will be redistributed due to adoption of integrated as-a-Service bundles in areas of security, cloud platforms, virtual workspace, and connectivity. Rick Vil­­­­­­­­lars, group vice president, Worldwide Research at IDC says, “To succeed, IT and business leaders need to make the transition from implementing digital transformation to running a digital-first organization that connects technology to business outcomes.”

New to digitization or looking to add more cloud capabilities to your SMB? Explore solutions by industry, benefit, use case, and more on AWS Smart Business

Prediction 3: By 2026, at least 40 percent of SMBs will introduce metrics to track and effectively measure business value from their core activities, partners, and environmental impact

Starting and running a business has dependencies outside of your control. External factors such as:

• Supply chain disruptions
• Labor shortages
• Inflation
• Lack of capital

Furthermore, SMBs are also challenged by internal factors such as setting up a formal digitization strategy, technology roadmap supporting business goals, and effective data governance. While SMBs heavily depend on internal tools to support their customers, they also rely on partners to succeed and scale to match the pace of innovation. These businesses should expand their horizon to include insights about their broader ecosystem including partner networks in addition to their own business processes. Although companies are challenged with limited predictability and control over external factors, they could use internal factors to track and guide for long-term business success and growth. Leaders should look for ways to collect metrics and draw data-driven insights to obtain actionable information and pivot existing processes to thrive.

Many SMBs still operate in spreadsheets to manually track and monitor key performance indicators, return on investment, and business metrics. SMBs should consider moving key data from spreadsheets and document repositories into business applications covering areas such as:

• Customer Relationship Management: A central repository of all customer data, tracking all customer interactions.
• Enterprise Resource Planning: Finance, inventory management, order management, supply chain management and data related to services organizations. ERP touches on procurement, production, distribution, and fulfillment as well.
• Human Resource Management: Managing high-value HR functions, such as recruiting, performance reviews, and employee training that streamlines talent management and reporting

SMBs should look into those three types of platforms to automatically measure metrics and business value from their core business functions. One guiding principle that could help SMBs succeed in an emerging digital world is to start (or continue) sharing their metrics with collaborators—such as vendors and partners—to ensure goal alignment.

Prediction 4: By 2025, 30 percent of SMBs will use live streaming technologies to launch new products and enhance the customer experience by facilitating easier product discovery and checkout.

The pandemic had a profound effect on how e-commerce transformed shopping. To this day, customers rely heavily on online shopping as their go-to buying channel. SMBs should focus on using an omnichannel marketing strategy to build brand awareness and drive revenue. Omnichannel marketing involves distributing content across various customer interaction touchpoints such as:

• Mobile apps
• Websites
• Social media
• SMS messaging
• Custom emails
• Online live chat

As an SMB, you may be unaware of such options or are constrained due to lack of budget, in-house technology skills, or overall process complexity. However, your organization could benefit from taking a holistic approach by consolidating customer service process workflows and customer data to create a unified marketing strategy in the cloud. Businesses should use this consolidated data to reach their customers for product launches, promotions, and sales.

Prediction 5: By 2027, two-thirds of SMBs will increase investments in automation and digital tools to improve efficiency, optimize processes, and boost productivity.

Most SMBs will grapple to retain and hire talent. This leads to additional pressure on the existing workforce to meet ever-growing business requirements. Businesses and IT providers will try mitigating this issue by investing in automation to reduce manual tasks and develop the right technical and collaboration tools to improve productivity. SMBs with limited IT technical proficiency may find value in low and no code software that allows users to automate processes and create dynamic reports.

Automation is the latest capability of organizations embracing technological innovation. In fact, by 2027, IDC predicts 65 percent of all organizations (including SMBs) will save over $1M USD a year using automation.

Next steps

The potential of cloud is truly unlocked when cloud is adopted as both a technology platform and an operational model, jointly enabling agility and responsiveness for the business. We at Amazon Web Services believe an SMB can realize all the benefits in the predictions laid out by adopting cloud first strategies. Reach out to an AWS expert to understand how to use it to upskill your employees, adopt cloud, and discover other cutting edge technologies. Visit Smart Business to learn about the different ways you can modernize your business strategy.