AMR Predicts SMB IT Spending Growth to Be a Paltry Few Percent in 2006

Published: January 18, 2006

by Timothy Prickett Morgan

The IT departments at small and medium businesses don't get a lot of respect from vendors, but the fact remains that the growth in the IT spending among this sector has been responsible for a lot of the recovery and then growth in IT spending in the past few years. (And, if you want to get real about it, the SMB market has been responsible for creating a lot of the new jobs the world's economies have created, too.) But, according to a new report from AMR Research, the little engine that could might be running out of steam.

AMR Research analysts Eric Klein and David O'Brien have run their budget models and reckon that IT spending growth among SMB customers will probably average somewhere between 2 percent and 3 percent in 2006. This is a lot lower than the 6 to 8 percent IT spending growth that SMBs racked up in 2005. The report says that smaller firms, like their larger brethren in the commercial world, are being hit with demands to reduce IT costs, deliver productivity gains, and to outsource some of their IT operations to third parties. The AMR IT spending estimates for SMBs was based on a survey of over 600 IT managers.

What this means for the iSeries market, if the AMR Research predictions turn out to be true, is uncertain. While the iSeries is perceived as a box for small businesses, it is really aimed more at reasonably large midrange shops with sophisticated back end applications and their remote facilities and offices, if they have any. If the anemic growth in SMB spending on IT in 2006 hits the Ss more than it does the Ms, then the iSeries biz might buck the trend AMR Research is predicting.