Small Business IT Investment Picture Improving: Report

The small business IT Growth Monitor increased five points from October to 54, a record high since December 2007.

The budding recovery in IT investment that started to take shape in 2010 appears to be heading for an uptick in 2011 as small businesses report a positive outlook on IT investment for their organizations. According to the latest CDW IT Monitor, which has been tracking IT sentiment since the beginning of the recession in 2007, 49 percent of IT decision makers at small businesses expect to replace or install new hardware in the next six months, up 10 percentage points from the October IT Monitor.

The confidence level among small businesses was also echoed in the medium business segment. Ninety percent of IT decision makers at midsize businesses expect to purchase new hardware in the next six months, also up 10 percentage points since October 2010. The small business IT Growth Monitor, which measures IT investment expectations, increased five points from October to 54, a record high since December 2007.

Rising growth expectations among SMBs (small and midsize businesses) are influencing sentiment across the entire corporate sector, according to the report, despite a leveling-off in the large business sector, which showed greater optimism earlier in 2010. Three-quarters or more of overall corporate IT decision makers anticipate replacing or installing hardware (75 percent) or software (78 percent) in the next six months-a record high in the corporate sector since the launch of the IT Monitor in December 2007.

In addition, the report found 61 percent of IT decision makers at small businesses anticipate replacing or installing new software in the next six months. However, the outlook for IT staffing is not keeping pace with investment expectations: Eight percent of corporate IT decision makers expect to cut IT staff in the next six months, up three percentage points from October 2010.

"As the economic climate improves, investing in technology will be critical for organizations seeking to increase productivity," said Thomas Richards, president and COO for CDW. "Focusing on the IT refresh cycle and upgrading existing technology clearly is taking immediate precedence with decision makers over increasing IT staffing in the near term."

The CDW IT Monitor was created by CDW, and independent polling firm Richard Day Research conducted research and analysis. Decision makers are invited from two large national panels of IT decision makers built and maintained by E-Rewards and Survey Sampling International. Data reported in this release are based on a survey of 1,056 IT decision makers conducted between Nov. 30 and Dec. 6, 2010.

At the center of the CDW IT Monitor is an index number, which registered an initial benchmark reading of 69 in December 2007. Results are calculated on a scale of 0-100, with 100 indicating the highest level of confidence. In terms of government sentiment, the optimism among corporate IT decision makers is not as strong in the public sector. The IT Growth Monitor, which measures anticipated IT investment, fell four points in the federal government sector to 69, the lowest reading of 2010.