IDC: SMBs to Delay, Reduce IT Spend Due to Downturn

Thirty-eight percent of small businesses (those with fewer than 100 employees) are likely to delay spending while 43 percent of medium businesses (those with 100-999 employees) are likely to reduce spending as a result of the downturn, according to a new survey from IDC.

The downturn in the U.S. economy is having a significant impact on SMB priorities and plans for technology acquisition, but with variations by company size, industry and attitude segment, the research firm said.

“The majority of SMBs are extremely or strongly concerned about the current and expected state of the U.S. economy over the next 12 to 18 months,” said Justin Jaffe, senior research analyst for SMB programs at IDC. “Although SMBs are expected to drive greater growth in IT spending than the corporate IT market overall, it will be critical for vendors to understand how changing economic conditions will impact the spending habits of companies of certain sizes, vertical industries and attitudinal characteristics.”

For example, taking a look at attitudes, IDC found fewer than 50 percent of “SMB 2.0” firms, the most forward-looking group, are extremely or strongly concerned about the U.S. economy, compared with approximately 70 percent of “IT Indifferent” firms and 60 percent of “Pragmatist” firms.

When slicing the data by vertical, IDC found businesses in the architecture/engineering, legal, retail and manufacturing sectors are the most likely to delay IT spending. Wholesale, insurance and legal firms are the most likely to reduce IT spending.

Interestingly, cloud computing initiatives are not being driven by economic concerns, save for the small minority of SMBs that indicate that they will look more closely at hosted solutions as a result of the economy.

In general, however, SMBs are more likely to focus IT investment on tactical projects, which deliver immediate benefits, than strategic projects.

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