Small Businesses Betting on IT Investments

While many businesses might be expected to be cutting spending and hoarding cash, a new study sponsored by IBM found that almost half of small to midsized businesses (SMBs) around the world are investing in the future.

“We were actually a bit surprised at the levels of focus on expansion and growth that came through within this study,” Ed Abrams, vice president of marketing for IBM (NYSE: IBM) general business, said in an e-mail to “This indicates to us that midsized business still see growth and opportunity within this market and are willing to invest to take advantage of it.”

The study, conducted between April 13 and May 20 on IBM’s behalf by Opinion Research, examined 1,879 business decision makers around the world who were working at firms of between 100 and 1,000 employees.

The findings are an important indicator of future growth, IBM said.

“With companies of 500 or fewer employees generating 60 to 80 percent of net new jobs annually over the last decade, these small and medium businesses are one of the most likely engines to lead us back to growth,” the company said in a statement.

While 53 percent of companies are focusing on containing costs, 47 percent of those surveyed said they are investing in the future by transforming the business, expanding it, or investing in customer relationships through technologies such as social media.

Opportunities for integrators

But priorities are not clear as IT managers face a conundrum. They know they need to provision new technologies and upgrade their core infrastructure to support new services, but often demands are growing faster than budgets.

One area of rapid change is Web 2.0 and social media.

“The full impact of these new technologies is not well understood yet,” Abrams said. “It’s our job to point out the benefits and that is what we are doing. I have no doubt these are transformative technologies and it would be hard to overestimate the eventual impact they will have on innovation and productivity.”

Consultants and integrators can help IT managers solve the challenges they face. The study said that 70 percent of those surveyed would prefer to partner with an IT company that has expertise in their area of business, and 67 percent are looking for partners that can provide IT infrastructure solutions.

That’s likely because although 75 percent plan to invest in their IT infrastructure, only 14 percent of those surveyed will have a larger IT budget this year, while 40 percent make do with the same budget and 37 percent operate on a smaller budget than the year before.

Some verticals and some nations have more resources than others. 62 percent of businesses in China reported higher IT budgets this year, compared to a year ago, according to the study.

Banks, in particular, are investing in IT. Worldwide, 23 percent of mid-sized businesses in the banking industry reported that they will have a higher IT budget this year.

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