SMBs Growing More Confident About IT Budgets and Plans

April 11, 2011 Jenny Thomas

IT budgets and hiring plans have hit their highest levels in 18 months among small and mid-sized businesses (SMBs), according to a new survey by Spiceworks, a social business network for IT.

The State of SMB IT survey included over 3,000 respondents from 128 countries who work in SMBs, which are defined as companies with fewer than 1,000 employees. Of the respondents, 30 percent were from North America, 28 percent from EMEA, 26 percent from Asia/Pacific, and 8 percent from Latin America.

The survey, which was conducted in January and February of this year, found that this segment of the IT user base continues to show strong signs of growth as technology budgets, cloud services usage, virtualization adoption, and IT staffing plans all had big increases over recent years.

The IT budgets in 2011 among those surveyed, for instance, grew 8 percent when compared with IT budgets for the second half of 2010, which is the largest increase in more than 18 months. The average annual IT budget for SMBs now stands at $132,000, an increase over the $121,770 previously reported for the second half of 2010.

Nearly one in three SMBs (31 percent) indicated plans to hire IT staff, also the largest increase in the past 18 months. Smaller companies (less than 20 employees) were most confident with 33 percent planning to increase IT staff, compared to only 17 percent of companies with 20 employees or more. The survey also revealed that more SMBs than ever before (15 percent) plan to add part-time staff.

The big growth, however, was in cloud services, which are currently used by 28 percent of SMBs, double that from the mid-year 2010 level (14 percent). By the middle of this year, cloud usage among SMBs is expected to rise to 42 percent. Survey respondents also reported that more than a quarter (26 percent) of SMB IT budgets are earmarked for hosted and cloud services. This is up from the 19 percent reported this time last year, representing a 37 percent year-over-year increase.

Almost one in three SMBs (30 percent) plan to change the way data is stored, moving more data to the cloud. Those SMBs that reported plans to make data storage changes, indicated they hoped to reduce their use of local system hard drives and direct attached storage (DAS) from an average of 53 percent today to 31 percent by mid-year. Furthermore, by mid-2011, SMBs that plan to change the way they store data will triple their online/hosted/cloud storage usage from 3 to 9 percent.

Virtualization has also seen tremendous adoption by SMB IT initiatives with 54 percent of SMBs currently using virtualization and another 20 percent planning to use virtualization by mid-2011. Among SMBs currently using virtualization, 54 percent are putting core apps in virtual environments. For the first time, virtualization is the number one planned new software purchase among SMBs, with 25 percent planning a new virtualization software purchase.

“Small businesses are responsible for half of all IT spending,” said Jay Hallberg, co-founder and vice president of marketing for Spiceworks. “All signs point to a good year for the IT industry as SMBs around the world significantly boost investments in technology products and services as well as staffing. Additionally, the hesitation many small businesses previously had toward virtualization and cloud services appears to have dissipated, which bodes well for purveyors of these technology offerings.”