The SMB IT opportunity is growing, but not where it used to be

Time to read

9 minutes

Author

Nathan Marke, Chief Strategy Officer at Giacom

Date published

June 2026

Let’s not beat about the bush, 2026 is proving to be a hard market. SMB confidence remains low, costs are rising, decision-making is glacially slow, and providers consistently report that new business is harder to win. Competition is also intense, driving down margins, and many providers are feeling the impact on their profitability.

But that doesn’t mean the SMB technology opportunity is shrinking, far from it in fact. Research from Analysys Mason predicts that UK SMB IT spend will reach a whopping £60 billion in 2026, growing at a resilient 6.1% CAGR. And to give you some indication of the medium-term trajectory, cloud categories alone are forecast to grow from £31 billion in 2026 to £44 billion by 2030.

The demand is there, that much is undeniable. But the more important question is where that spend is moving, and how we as a channel can get ahead of it. To explore that question, we recently invited Karthik Pannala, Principal Analyst at Analysys Mason, to join us for a live webinar on where UK SMB IT spend is going in 2026 and how MSPs can win more of it.

You can watch the full webinar here.

10 points to keep in mind:

1. UK SMB IT spend is still growing, even in a difficult market.
2. The money is moving away from traditional resale and towards managed, service-led delivery.
3. SMBs want fewer suppliers, clearer accountability and more strategic support.
4. Services now represent the largest share of SMB IT spend.
5. Cybersecurity has moved from a technology concern to a core business priority.
6. AI spend is becoming embedded in existing platforms, rather than bought as standalone products.
7. MSPs can turn AI readiness, governance and adoption into billable services.
8. Product resale is flattening, while MSP and SI-led delivery is growing much faster.
9. Technology providers need to bundle more intelligently, especially around connectivity, cybersecurity and resilience.
10. The long-term opportunity is Everything as a Service: broader, recurring, managed propositions that help SMBs consume technology more simply, securely and profitably.

SMBs are not buying technology in the same way

Once seen as a ‘nice-to-have’, modern SMBs have quite rightly come to regard their ICT setup as a commercial necessity that they rely on to run their businesses effectively. But hardly any SMBs have the know-how, resource or time to manage increasingly complex IT environments themselves. They recognise that they need help, and what they want is fewer suppliers, clearer accountability, and predictable costs. Above all, they want someone who will make their technology ‘just work’ on an ongoing basis, ensuring it’s always working to their advantage and never a source of frustration.

This is borne out by the fact that services now account for the largest share of SMB IT spend. According to Analysys Mason, services represent 45% of SMB IT spend in 2026, ahead of software at 27% and hardware at 19%.

In short, SMBs are moving from ownership to consumption. They don’t want to buy, own and manage everything themselves, they want to subscribe, consume and scale. They want technology that is delivered as a service, managed by someone they trust, and aligned to their business needs.

So, what does this mean for us as technology providers, especially when there are thousands of MSPs competing for the same customers with access to similar products and vendors? Simply reselling products and services isn’t going to cut it, not if you want to win more business in a crowded market. Differentiation will increasingly come from how you package, deliver, manage and support those services.

Cybersecurity has become fundamental

Cybersecurity should be the foundation of any offering you plan on taking to market. For several years, it has topped the technology agenda for SMBs. Over the past year, however, it has moved beyond being a technology priority and become a core business priority, increasingly, the most important one.

It’s easy to see why. A cyber attack is no longer a case of if, but when. And if a single incident stops a business from operating, every other priority, from productivity and growth to efficiency and more, is put at risk too.

The SMB need for robust security is acute. To reduce cyber risk, they need the kind of attentive, proactive service that only the channel can provide.

You may be reading this and asking yourself: “Demand may be high, but is it really worth the risk?” Delivering security services does carry risk. But in 2026, security is something every SMB has to have. If you’re not offering it as part of your package, someone else is definitely offering it as part of theirs.

It would also be a mistake to look at cybersecurity in isolation. The reality is that it’s an anchor product. Get it right, and it opens the door to a wide range of adjacent, high-value products and services. The reverse is also true. Providers that are selling broadband, ethernet, cloud, Microsoft 365 or managed IT, but are not pulling through cybersecurity, resilience and management services, are missing a significant opportunity.

This is especially true in connectivity. Too many providers still sell connectivity as a standalone service, when there is a much stronger proposition available. Connectivity, security, resilience and managed support can be bundled together in a way that creates peace of mind and greater value for the customer, as well as a stickier, more profitable relationship for you as the provider.

In short, cybersecurity shouldn’t be treated as an optional add-on. It’s a must-have. And the security propositions that will have the broadest appeal to SMBs are those that are robust, easy to adopt and scalable, both in terms of headcount and security layers.

AI is becoming embedded, not standalone

AI is another area where the market is changing rapidly, but it’s important to note that most SMBs will not buy “AI” as a standalone product. In many cases, they’ll consume AI through platforms they already use, such as Microsoft 365, CRM systems, finance tools, security platforms and customer engagement solutions.

Analysys Mason’s research suggests that around 29% of UK SMB IT spend is now AI-driven, with 38% of SMBs actively using AI tools and 78% paying extra for AI add-ons in existing platforms.

This matters because it tells us that the AI opportunity is not in simply selling licences, it’s about helping customers understand where AI can create value, how to adopt it securely, how to govern it properly, and how to avoid unmanaged “shadow AI” usage across the business.

There is also a bigger pricing and service model question that, as an industry, we need to consider. AI challenges the traditional per-seat model because the cost is not always tied to the number of users. Increasingly, it may be tied to usage, outcomes, automation, agents or consumption.

That creates complexity for us as technology providers, especially around billing, packaging and risk. Do you bundle AI capability into a fixed monthly service and absorb the usage risk? Do you pass it through on a metered basis? Do you build outcome-led services around it?

The market has not fully settled on the answer yet. But one thing is clear, providers that understand AI internally first will be in a much stronger position to advise customers.

This is the “Customer Zero” opportunity. MSPs that adopt AI within their own operations can turn that experience into repeatable, practical services for their customers.

Managed service delivery is where the growth is

According to Analysys Mason, MSPs and SIs are forecast to grow at 10.2% CAGR, compared with 4.1% for resellers and VARs. In simple terms, product resale is flattening, while managed service delivery is accelerating. This doesn’t mean resale disappears entirely, but the strongest channel businesses will be those that can build recurring revenue, wrap services around core platforms, provide strategic guidance, and help customers continuously optimise their technology estate.

That could include virtual CIO services, quarterly business reviews, security reviews, AI readiness assessments, cloud migration planning, cyber resilience services, agentic building and optimisation services or propositions built to serve specific vertical markets.

This is by no means an exhaustive list, but the central point is to move into a more strategic role, becoming indispensable by helping your customers to make better decisions, get more value from the technology they already have, and keep improving how that technology supports the business.

When developing your proposition, it’s also important to keep in mind that SMBs are actively looking to consolidate suppliers. They want fewer providers, not more. This creates a risk for providers with narrow propositions, but it creates a major opportunity for MSPs that are willing to go broader and deeper with their customers.

The opportunity is shifting to Everything as a Service

Taken together, these trends point in one clear direction. The future of the SMB technology market is becoming more service-led, more subscription-led, and more focused on ongoing value and outcomes.

Customers want technology that is easier to consume, easier to manage and easier to scale. They want predictable costs, trusted advice, and a strategic partner that can help them make sense of a fast-changing technology market.

For technology providers, the opportunity is to move beyond product resale and build broader Everything as a Service propositions that look at an SMB’s technology estate as a whole. That means bringing together cloud services, connectivity, cybersecurity, mobile, collaboration, AI and more, all supported by the right managed service wrapper.

Crucially, these technology offerings need to be positioned not as products, but as solutions with clear business outcomes that customers actually care about. Helping them work more efficiently, handle more customer transactions, get more value from their data, and sleep easier knowing their business is protected from cyber-attack.

That does not mean every provider needs to become an expert in everything overnight. Giacom, and companies like ours, exist to help partners develop and diversify their propositions in a safe and controlled way, with the right expertise, platforms and support around them. But it does mean providers need to think carefully about where the market is heading, where their future margins will come from, and how they can make themselves more valuable to customers.

Conclusion

So, despite the market challenges, let’s not lose sight of the simple truth that the SMB IT opportunity is growing, but that the growth is not where it used to be.

The winners will be those that follow the spend, respond to changing customer needs, and build service and outcome-led propositions that help SMBs consume technology more simply, securely and profitably. In doing so, you’ll put yourself in the best position to win more business, build deeper customer relationships, and create a stronger foundation for long-term growth.

Nathan Marke, Chief Strategy Officer, Giacom.