In this second part of our 2019 review of the IT landscape, we look at the current economic outlook for the U.S. and the IT industry. We also look at how small and medium-sized businesses (SMBs) view technology and their IT providers. This provides context for the economic and financial considerations around the future of technology. Do we expect growth or contraction?
U.S. Economy Outlook
As a Midwest technology provider, OXEN focused our review on the economic outlook for the U.S. and, specifically, our local nine-state area.
The overall economy remains promising for 2019.
- The leading economic indicator for the ten-state region from Minnesota to Kansas/Missouri rose above growth neutral in June after dipping below in May. This marks the sixth month in the last seven that the indicator finished above growth neutral.
- 70% of bank CEOs in the region support continuing or raising current tariff levels.
- Farm equipment and farmland indicators both increased across the region in June.
- Despite the tariffs and flooding over the past several months, businesses in the region continue to hire at a solid pace, though a slower pace than the nation as a whole.
- Continue to expect growth to weaken in Q4 2019 and Q1 2020 with an estimated 25% chance to slip into a recession in 2020.
The Business Conditions Index, which ranges from 0 and 100, climbed to 55.4 from May’s 54.3. This is the 31st straight month the index has remained above growth neutral 50.0.
- Shortages of skilled workers remains an impediment to even stronger growth.
- Tariffs are also an impediment.
The June employment index expanded to 64.5 from May’s 61.8. The June price-index (inflation gauge) dipped to 59.1 from May’s 62.8 and has weakened nationally indicating slight inflationary pressure. Consumer Confidence in the region for gauging the next six months advanced to 59.1 from May’s 54.5.
The global information technology industry is on pace to reach $5 trillion in 2019 (IDC). The enormity of the industry is a function of many of the trends discussed in this overview. Economies, jobs, and personal lives are becoming more digital, more connected, and increasingly more automated. Waves of innovation build over time, powering the technology growth engine that appears to be on the cusp of another major leap forward.
- The U.S. is the largest tech market in the world: 31% of the global IT market, or $1.6 Trillion.
- CompTIA projects the global information technology industry will grow at a rate of 4.0% in 2019.
The relevance of IT in the SMB Market
The Small Business Administration (SBA) defines as a small business as one with 1 to 500 employees.
- There are approximately 9 million U.S. business establishments.
- There are another 19 million sole proprietors
The top four verticals – healthcare, professional services (e.g., accounting), retail, and construction – account for 54% of all business establishments in the SMB market.
Top Ways SMBs Use Technology Partners
How do small businesses use their technology partners? CompTIA provides this recent ranking:
- Repair / troubleshooting / break-fix
- General IT consulting / advisory
- Web design or e-commerce related
- Deployment, installation, or integration
- Cybersecurity related
- Procurement of hardware / software
- Cloud related
The following charts from CompTIA break down:
- SMB satisfaction with their IT investment ROI
- Factors for IT investment shortfall
- Top tech issues that need improvement
- IT vision and strategy
- Spending priorities
- IT staff/support
The third part of our 2019 State of the IT Landscape update will begin our dive into current IT industry trends with one of the biggest topics: cybersecurity. We hope you will join us!