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SMBs lead in IT spend in 2008, relying more on services

Recent IDC study indicated almost half of small to mid-sized businesses (SMBs) have increased their IT budgets for 2008, ahead of larger enterprises. Study shows their lack of expertise in buying and deploying technology means their spending will be concentrated on playing catch-up with their larger counterparts. It also found security is still the top priority followed by infrastructure, and then application, modernisation. Meanwhile, new software investment decreased as a focus for investment. But services emerged as key, given the fact that SMBs were looking “to align their IT infrastructure better with the business and want to improve IT service levels to the business,” said the survey.

Because SMEs have less experience of how to do that, they therefore plan to buy more consultancy services to understand how best to realise their strategic goals. This would be good news for the consulting industry, but also warned economic uncertainty is likely to dampen consulting spending.

The survey also found two-thirds of SMBs already used outsourcing to some extent and a third are ready to invest in more or invest for the first time. Cost reduction is a more important driver of outsourcing spend for these organisations than it is for larger enterprises, where the latter see outsourcing as a tool for business innovation leading to better alignment of IT with business.

Study advises SMBs to buy more standardised, cheaper and easier-to-consume services, while vendors should offer clearer and fewer choices in order to make the buying process less painful, more according to individual industry needs than generic requirements according to size.