Expert Advice for Medium and Midsize Businesses

All the Surprising Areas Applications Budgets are Being Spent

Christiane Soto
Marketing Manager - SMB

Growing small-to-medium businesses (SMBs) must figure out how (and where) to invest their limited budget, time, and resources in taking the business to the next level. Not an easy decision. But making the right technology investments is crucial for SMBs that want to survive and thrive. So that started us wondering: how are SMBs placing their bets in the business application space?

Net-New Application Investments

Although specifics vary based on business size (i.e., revenue band), we have discovered some overall trends. Overall, the number one area for net-new business application investments is business intelligence and analytics. Not surprising, as today, every company is a data company. As they move up in size, companies need access to accurate, actionable intelligence from the growing volumes of data they’re collecting. That knowledge is necessary to stay ahead of the market and their competition.

Growing SMBs put marketing automation in the number two spot, while customer service and enterprise resource planning (ERP) tie for third as the top three areas in which, overall, SMBs plan to add a net-new solution.

Replacement of Existing Applications

On the replacement front, ERP is the number one area in which SMBs are considering a switch; 40 percent of those surveyed stated that they are considering replacing their current ERP solution. The top reasons for the switch are

  • the current solution is too expensive/complex
  • the need for better reporting and analytics
  • a desire to move from an on-premises to a cloud solution

Rounding out the top three for replacement of existing applications are enterprise performance management (EPM), also known as corporate performance management, and customer service automation.

But do needs change as SMBs grow?

Focus of Medium-sized Companies Between $100-299M

Companies that have reached $100M are shooting to get past the next growth plateau that usually appears at around $300M. 

Companies that we talked to are focused on three areas and are spending money to help them improve. Improving planning, budgeting, and forecasting (for improved decision making) was the number one reason (at 61 percent) companies this size are investing in new solutions. Improving customer service and retention rates and automating repetitive manual tasks (e.g., order entry, billing, payments, etc.) tied for second place at 60 percent each. Rounding out the list—at 54 percent—is the need to improve employee recruitment, acquisition, and retention.

Focus of Medium-sized Companies Between $300-499M

Companies that have reached $300M have reached a new level. They are more stable, have already created their second and third (and maybe even fourth) iteration product, and have an executive team that is gunning to get the company to $1B. Growth is still the focus. But they still recognize the importance of the right technology to help them refine and, even, redefine their product/service offering and their brand.

Companies in this revenue band are focused on many different areas, but three bubbled to the top. Reducing logistics costs (e.g., warehousing and transportation) was named as the number one area—at 67 percent—these larger SMBs are spending money to help them improve. But no matter how big you get, customer retention is still the key to growth. Selling to established customers is much less expensive than having to find new customers continually. Therefore, 65 percent stated improving customer service and retention rates was a top area of focus.  Rounding out the list, at a three-way tie, is the need to improve employee recruitment, acquisition, and retention; improve planning, budgeting, and forecasting; and improve procurement and supplier contract management (all named by 63 percent of larger SMBs).

So needs do change has companies grow, especially in the SMB space. A company at $100M is an entirely different beast than a company that has reached $350M. The need to improve and refine all aspects of your business will never go away. The only difference is what gets the most attention first.

Want to learn more about the spending habits and technology trends of companies that are facing similar circumstances as you?  Check out the recent research report, Top 10 SMB Technology Trends for 2019.

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