UK SMEs set to increase IT investment in 2023 despite concerns about rising costs

Technology has been a game-changer for businesses of all sizes and industries. The digital revolution has brought about significant changes in the way businesses operate and communicate with their customers.

Investment in technology is planned to increase this year in almost half of UK SMEs, despite serious concerns over rising costs according to new Pan European research unveiled today.

The new insights commissioned by Sharp, a major provider of business technology products and services, found that across Europe and in the UK, SME technology investment is set to continue to rise. The biggest area of investment focused on IT security, hardware upgrades and server updates.

In terms of investment levels, over 50% of UK SMEs plan to invest more than £20,000 on IT this year with 5% expecting to invest more than £100,000. Businesses also shared that they intended to invest in new hardware (33%) and server upgrades (28%) over the course of 2023. This is in addition to security and business continuity (34%) which were also highlighted as key areas for investment.

Surprisingly, cloud migration was a lower priority for UK businesses (21%) than SMEs in Europe, where almost a third (31%) of firms planned to embark on cloud migration projects as they continue to deal with the challenges of hybrid working. However, IT, education and awareness may be a specific challenge for UK SMEs to address, with implementing Cyber Essentials (25%) and improving on Business Intelligence/MI (23%) being amongst the top investment priorities.

SME investment in technology was analysed against more general business challenges, with rising supply costs (39%) and the cost of living in general (41%) being of greatest concern in the UK in comparison to the rest of Europe, with the lowest respectively (26% and 27%) for Sweden. Finding and retaining talent (23%) and managing a diverse hybrid workforce (22%) were also noted as key issues, slightly lower than the rest of Europe at 27% for both.

Stuart Sykes, Managing Director at Sharp UK, comments: “Despite understandable concerns about rising costs in the UK, businesses here are investing strategically in technology and seeing its value, even at a time of uncertainty. Organisations of all sizes are dealing with a host of issues in a hybrid working environment such as IT and security challenges, ensuring that technology is planned to support these issues now and in future.”

As with other SMEs in Europe, IT security is the biggest technology challenge UK businesses feel that they will face over the next 12 months, with a third (33%) highlighting security as their top priority. Interestingly tech challenges varied between business sectors in the UK. Hybrid working technology issues was flagged as the most critical issue for almost two thirds of SMEs surveyed in the legal sector (63%) and for nearly 4 in 10 of the healthcare industry (38%). Employees’ ability to use software was reported as the primary challenge for the healthcare sector (50%).

Colin Blumenthal, European Vice President, IT Services at Sharp Europe, adds: “The past two years have reshaped the way businesses run, how their employees work, and expanded their threat landscape.

“The continued shift of workloads, processes and data to the cloud and on-premises infrastructures are enabling enterprises to create a value proposition that supports a new generation of workers and will be key to hiring and retaining the best talent possible. It’s encouraging to see that SMEs across Europe are realising the opportunities for growth through investment in IT. Those priority projects that will receive funding over the coming months will deliver greater efficiencies, better management of diverse hybrid workforces, and support in delivering improved IT security.”

UK SMEs in the legal, finance and healthcare sectors intend to invest the most in IT in 2023. When asked how their 2023 IT spend will compare to 2022, 75% of SMEs in the legal sector, 55% in the finance sector and 50% within healthcare planned to increase their investments. Improved IT security and business continuity, new/upgraded servers and enhanced business intelligence/management information were all cited as the primary motivations behind the spend. In contrast, only 2% of all UK SMEs surveyed planned to invest nothing at all in 2023.