Growing Interest in Managed Services, SAAS, Report Says

A worldwide survey from AMI suggests midmarket companies are taking a more formalized approach to IT purchasing decisions, while looking toward managed services and SAAS solutions.

An 11-country study by technology research firm AMI-Partners found a drastic increase among small to medium-size businesses worldwide that show very strong interest in managed services and software as a service, as well as dramatic increases in SMBs' plans to outsource specific IT needs such as storage, security and telecommunications.

The report found nearly 60 percent of SMBs worldwide are now interested in managed services, representing an almost 100 percent increase from the previous three months, and nearly 40 percent of SMBs are interested in SAAS. The study also highlights changing dynamics in the way SMBs are making IT purchases. The purchase process has become more formalized, and decision-making cycles have been significantly extended compared with just three months ago. In addition, key decision makers involved in IT purchasing are exuding even greater influence of why, when and where IT purchases are made.

For example, the business decision makers (BDMs) are now playing an increasingly important role in the first two stages of the purchase process: assessing key business needs driving the IT purchase and deciding on the specific brand of the IT product and/or service. Over the last 12 months the influence of business decision makers (or owners and presidents) has increased drastically. For example, in a fourth-quarter 2008 U.S. study, approximately 31 percent of SMBs stated that their BDMs were involved in "brand selection" while making an IT purchase. The most recent study found that this number jumped to 83 percent.

The study found that most SMBs feel the economy is starting to stabilize; however, businesses are still seeking ways to significantly reduce costs and increase revenues. This includes exploring IT products and services that can directly and immediately help ease exaggerated pain points like restricted cash flow and limited access to credit.

"Solutions like SAAS and managed services offer flexible payment options and usage-based models that are very attractive to SMBs right now, as they struggle to overcome the credit crunch and very tight IT budgets," said AMI's Vice President of Marketing Chad Thompson. "SMBs are re-evaluating the way their businesses run on a number of fronts, including where and how they spend money, how they drive revenues and how IT supports these goals."

Other changes in SMBs' IT perceptions and behaviors include their likelihood to purchase specific IT categories like desktops, notebooks, servers, printers and software. The study highlights the small percentage of SMBs that are "very likely" to make a specific IT purchase in the next three months compared with those "somewhat likely" to buy.

"What we are seeing quarter-over-quarter is that SMBs that say they are -very likely' to make a purchase in the next three months tend to make that purchase; however those that say they are -somewhat likely' will require a clear and compelling reason to make the purchase," said Thompson. "The -somewhat likely' group, or what we call the Fence Sitters, needs a sense of urgency to drive that pent-up demand."