Survey: SMBs to boost spending less this year

Survey: SMBs to boost spending less this year

Small and medium-sized businesses in North America expect to spend an average of only 2 percent more on IT in 2007, a Forrester survey says

Small and medium-sized businesses (SMBs) in North America expect to increase their IT spending by an average of only 2 percent this year after going on a 8 percent spending spree in 2006, according to a Forrester Research survey.

The survey of about 1,200 businesses with six to 999 employees, released Tuesday, showed that 62 percent of them have an optimistic outlook for their companies this year, up from 46 percent in a 2006 survey, but that doesn't translate into significantly more IT spending, said analyst Michael Speyer.

"Last year's spending increased fairly robustly. The ... market is telling us now, 'Guess what? We're going to keep it steady now,'" Speyer said.

IT spending will focus on new hardware purchases and added personnel. Hardware spending is expected to focus on replacing or upgrading servers and the regularly scheduled replacement of about 25 percent to 30 percent of companies' desktops and workstations. Software purchases will be mostly of network security and Web application products.

Twenty percent of IT managers surveyed said improving the efficiency of their IT systems is a top priority, and 33 percent of them are focused on measuring the impact of their IT spending on business performance.

Although virtualization is a big trend in IT, small and medium-sized businesses are less focused on it than are large enterprises, Speyer said. Virtualization, which among other things makes it easier to run multiple software applications simultaneously on one physical server, enables a company to consolidate the number of servers it operates. But SMBs are less likely to use virtualization for server consolidation because the potential savings are not as great as in enterprises.

"If you look at a typical midmarket company, anything from 12 to 17 servers, there's not a whole lot of hardware there. Where server consolidation plays out is in the enterprise space where you have hundreds of servers," he said.

Although SMBs may do some server consolidation, they may still buy some new servers for disaster recovery and security purposes and to run new software applications, the survey said.

And although new technology is supposed to increase automation, SMBs will devote 29 percent of their IT budgets to full-time IT staff, the highest of any spending category, including hardware, software and networking equipment.

As IT systems grow, they get more difficult to manage, but SMBs don't have the in-house staff to manage systems as an enterprise does, Speyer said. So while they may have to hire more full-time employees or part-time contractors, they may also turn to system integrators or value-added resellers to take over some management functions.

IT spending also varied by industry sector. Spending is expected to rise most steeply in the telecommunications sector (7 percent), business services (5 percent), and finance and insurance (3.4 percent). It is expected to decline in the manufacturing sector (-0.6 percent) and the media, entertainment and leisure sector (-0.9 percent).

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