The Good Word on U.S. SMB IT Spending
June 20, 2011 Jenny Thomas
When more and more people are saying the same thing, it’s gotta be true. Right? Participants in the small and medium-sized business (SMB) market–including the companies themselves and the vendors that supply thing to them–are certainly hoping so as more good news comes from a recent study by IDC.
According to the IDC, IT spending growth has returned more rapidly than expected since the recession officially ended in 2009. IDC’s recent forecast found the nearly 8 million SMBs in the United States will spend more than $125 billion on advanced technology in 2011, an increase from approximately $120 billion in 2010.
Past IDC studies have shown the SMB segment traditionally has higher IT spending growth, but that pattern was broken in the thick of the recent recession as smaller firms were more adversely affected by the economic downturn. The spending increase in 2010, and the predicted one for 2011, represent a substantial rebound from 2009, when SMB IT spending declined by 4.2 percent.
In its report, U.S. Small and Medium-Sized Business 2011-2015 Forecast: The Return to Spending Growth Drives Investment in Key Infrastructure Categories, IDC presents predictions for total spending for 2011 to 2015, with a baseline year of 2010. SMBs are defined as small businesses (less than 100 employees), lower midsize companies (100 to 499 employees), and upper midsize companies (500 to 999 employees). The study forecasts the total number of small and midsize businesses, with ownership of key technology categories including notebook PCs, local area networks (LANs), and server-based LANs.
“SMBs account for an increasing share of overall corporate IT spending in the U.S.,” said Justin Jaffe, senior research analyst for small/medium-sized business and home office research at IDC. “Vendors that understand how changing economic conditions and emerging technologies are affecting IT acquisition for different company size segments will have a considerable advantage in developing and marketing technology products and services for SMBs.”
While access to credit is still limited and firms remain reluctant to add new employees, the IDC report found emerging technologies are disrupting established patterns of IT acquisition. For instance, the study revealed that notebook PCs will continue to represent a larger share of total PC shipments into the SMB market in the United States than desktops. In 2015, the number of SMBs in the U.S. with notebooks will approach 4.7 million.
IDC also foresees the number of SMBs with local area networks will exceed 4.5 million in 2015, as even smaller businesses look to connect their users’ PCs. The declining price of entry-level hardware will drive server acquisition in small firms as virtualization solutions motivate midsize firms to upgrade and consolidate their environments.
Reports of an economic rebound for the SMB segment have been consistent since the beginning of 2011. IT Jungle has been following chatter, and recently covered two IBM surveys of the midmarket that also offered good news for this important business sector. The first was IBM’s 2011midmarket study, which found that 53 percent of midsize businesses plan to increase their IT budgets over the next 12 months. IBM also conducted a survey of more than 3,000 CIOs, revealing that 83 percent identified analytics as their top-priority investment area.
Only time, and an accounting of actual spending at year end, will tell if all this encouraging prognosticating will come true, but one can’t help but be encouraged by the flood of good news. So start funding those IT projects, accomplish your goals, and make these predictions come true, SMBs.
A copy of the IDC forecast is available for purchase here.