Small-Business IT Budgets Rising, Hiring Stalls: Spiceworks

Spending on hardware, software and IT services accounts for the largest share of SMB IT budgets as companies remain reluctant to hire new staff.

Small and midsize businesses worldwide are adapting to a new workplace reality that sees technologies like tablets and cloud services rise in importance, according to Spiceworks' biannual State of SMB IT survey, which investigates technology purchasing, use and staffing trends among companies with fewer than 1,000 employees.

While IT budgets at SMBs are rising—growing 7 percent since the first half of 2012—only 26 percent of SMBs surveyed plan to hire IT staff in the second half of 2012, a 4 percent decline from earlier this year. The average annual SMB IT budget is $162,000, up from $152,000 reported in May. SMBs with one to 20 employees spend $1,900 per employee on technology, more than twice the $700 per employee organizations with more than 250 employees spent.

Hardware purchases such as notebooks, desktops, servers and storage devices continue to account for the largest share of SMB IT budgets at 40 percent, followed by software at 34 percent and IT services at 26 percent. Tablet use continues to grow, survey results indicated, with 53 percent of SMB respondents supporting company-issued tablets on their network, and an additional 12 percent planning support during the first half of 2013. Among those IT departments, 85 percent support Apple's iPad devices, while 59 percent support Google Android-based tablets.

"The world's SMBs continue to increase their investment in new technologies, including tablet devices, smartphones, cloud services and virtualization," Jay Hallberg, Spiceworks co-founder and vice president of marketing, said in a statement. "The results of our research bode well for the industry as new technologies become more pervasive and prompt IT departments to make additional investments."

In addition, the bring-your-own device (BYOD) trend continues to prove popular despite IT hesitations, with 59 percent of SMB respondents employing a BYOD initiative and supporting employee-owned computers, tablets or smartphones on their network. Among these, 87 percent support iPad devices, while 79 percent support Android-based tablets. Meanwhile, 86 percent support iPhones, and 88 percent support Android-based smartphones.

The survey found that 14 percent of SMBs fully embrace the trend, 32 percent report that it works well for some devices, but not for others, while nearly a quarter (24 percent) claim it is a headache for their IT department. The remaining 30 percent had not yet formed an opinion on the merits of BYOD initiatives. Businesses with less than 20 employees are most likely to fully embrace BYOD, with nearly three-quarters highlighting an ongoing initiative.

Cloud services are now used by 62 percent of SMB IT departments, up 35 percent year-over-year, according to the survey. During the first half of 2013, 73 percent of SMBs anticipate using cloud services, with Web hosting, email hosting and data backup/recovery solutions among the most popular cloud-based services. Nearly a quarter (23 percent) of SMBs have currently deployed desktop virtualization and an additional 16 percent plan to adopt it in the first half of 2013, and nearly two-thirds of SMBs have deployed a virtualization solution and adoption is expected to accelerate in the first half of 2013 by an additional 14 percent.