A year ago, before the economy started going south, we reported that midmarket IT spending was rising an average of 8.6 percent. Now, when some economists say we’ve slipped into a recession, spending is rising a mere … 8.3 percent.
In other words, it hasn’t changed.
One reason: Companies with revenues below $500 million are focused on growth; 72 percent expect their revenues will increase by more than 5 percent in 2008. They are increasing their investments in applications to support growth–databases, e-mail, ERP and storage, for example–and applications to support sales, marketing and customer service–business intelligence and CRM, for instance. Another reason: They see opportunities to reduce infrastructure costs so they adopt virtualization, voice over IP and open source software.
Yet another: Small and midsize businesses invest in their IT staff, using outsourcers less often and increasing spending on training by a bigger percentage than larger companies.
Undoubtedly, a recession will force more SMBs to cut back. But overall, small and midsize businesses are not yet ready to pull the plug on their IT spending.