Small Businesses Ignoring iPad, Hosted Services, Report Finds

A survey of cost-conscious businesses by Spiceworks finds companies are planning on software upgrades and moving to the cloud, but reducing their dependence on hosted services and ignoring devices such as netbooks and Apple's iPad.

The technology spending freeze of late 2009 is showing signs of thawing among small to medium-size businesses, according to a survey by networking management specialist Spiceworks.

The vast majority is seeing overall IT budgets and spending rise in the first half of 2010, according to the survey, State of SMB IT April 2010. The survey of IT professionals had 1,250 respondents from around the world in organizations with fewer than 1,000 employees. The average annual technology budget of survey respondents was $117,200.

The survey, which was designed to investigate current technology purchasing, usage and staffing trends among SMBs worldwide, was fielded in January and February 2010 by the Spiceworks Voice of IT market research program. Survey result highlights noted the average IT budget climbed nine percent in 2010, with 43 percent of SMBs reporting budget increases. Nearly half (47 percent) of 2010 IT budgets is allocated to new hardware purchases, 34 percent to new software, and 19 percent to IT services. Top upgrade priorities include virtualization, antivirus/anti-spam, backup and recovery, and Windows 7 upgrades, with 55 percent of SMBs planning software purchases in the first six months of 2010.

Netbooks as well as tablet computers such as the iPad are still not popular among SMBs, the survey found, representing less than 3 percent of planned new mobile computer sales over the next six months. However, 80 percent of SMBs plan new desktop, laptop and server purchases in the first six months of 2010 in order to refresh hardware that is on average 48 months old. The survey found companies are moving some hosted services in-house, with hosted services purchase plans down 15 percent in the first six months of 2010, compared with the last six months of 2010. Hosted antivirus and anti-spam services show the biggest drop from 11 percent to 3 percent purchase intent, while hosted e-mail shows the most stability at 23 percent.

A surprising finding showed that 22 percent of SMB IT pros plan to purchase, upgrade or renew CRM applications, indicating that IT departments are becoming more involved in the CRM purchase process. The survey indicated virtualization technology continues to be very popular among midmarket companies, with 41 percent planning new or additional investments in virtualization solutions in the first six months of 2010. Existing deployments increased workload virtualization density from 21 percent to 25 percent over the last six months.

Currently, 25 percent of survey respondents said they plan to utilize cloud computing services over the next six months. The main reasons cited by those holding back on cloud investments include technology, security and performance concerns. Early cloud converts are bullish, and 44 percent said they plan to add at least one additional cloud service in the next six months. The majority of SMBs (67 percent) said they plan to keep their IT staff the same for the first half of the year, while 20 percent plan to add new full-time staff. Companies with less than 20 employees report the strongest increase in hiring plans. Results also indicate the use of contractors and part-time resources will drop in 2010 versus 2009. Only 3 percent of midmarket companies said they plan to use them, compared with 8 percent who did in the second half of 2010.

"The technology spending slowdown among small and medium businesses seems to be over," said Jay Hallberg, co-founder and vice president of marketing for Spiceworks. "In the first half of 2010, bright spots are clearly seen in core technology areas, such as new hardware and software purchases. However, planned adoption of emerging technology may take some time. We will continue to watch these and other SMB technology trends carefully over the coming year."