SMEs Maintaining IT Spend to Work Smarter, Leaner

A new IBM-sponsored study shows that although the economy is driving small-to-medium-sized enterprises (SMEs) to work smarter and leaner, many are not actually decreasing their investments in IT, but maintaining current levels or increasing their IT spend to focus on strategic areas.

And despite pressure to cut costs, mid-size companies are proceeding with IT plans that range from information management to social media and cloud computing.

Moreover, the survey conducted in April and May of 2009 shows that SMEs are aware that they need to work smarter and leaner, but overall appear undaunted by the recession.

The “Inside the Mid-market: A 2009 Perspective” study surveyed 1,879 business and IT decision makers in 17 countries to get insights into their business plans and challenges, growth and innovation strategies, IT purchasing trends, and industry-specific pain points.

IBM officials said the study reveals five key trends:

1. The highest-priority technology solution, chosen by 75 percent of respondents, is information management, which turns mountains of data into meaningful insights.

2. The most pressing business challenges include increasing efficiency and productivity (80 percent), improving customer care (74 percent) and better use of information (72 percent).

3. The impact of the economy on IT budgets has caused 53 percent to actually increase or re-prioritise their spending, with 37 percent reporting a decrease.

4. Despite the economy, more than two thirds of those surveyed are planning or currently implementing their top IT priorities.

5. A majority of firms view their primary IT provider as a technology advisor or IT and business consultant, with 25 percent seeing the relationship as purely transactional.

Information management was ranked as the most critical IT priority for improving business performance by the largest majority of participants. At a time when digital information is growing at exponential rates every day, organisations need smarter ways to cope with the increasing information overload by turning this data into real intelligence, IBM said.

“Mid-market organisations openly acknowledge the challenges posed by the current economy, but they aren’t paralysed into inaction,” stated Marc Dupaquier, IBM Global Mid-market general manager. “In spite of tough economic conditions and concerns about lack of implementation skills, they are continuing to spend and plan against their key IT projects to support their business goals. This study clearly shows that mid-sized companies, which we believe will be the engines that lead us back to economic growth, are being cautiously optimistic and proactive.”

Indeed, 53 percent of the survey respondents said their IT budgets were either increasing or remaining the same but with shifting priorities. Of that 53 percent figure, 39 percent said they were maintaining current IT spending levels and 14 percent said they were increasing their IT budgets.

Meanwhile, 10 percent reported no change, while 37 percent were reducing their budget. According to study data, most are holding or increasing their budgets to use IT to help drive efficiencies or reduce costs in other areas of the business or better connect with customers.

The survey also illustrates the growing role of emerging technologies, such as cloud computing, green IT, and social media, which are areas that were not included in a similar IBM study conducted in 2007. Although these areas showed up lower on the scale of critical priorities, SME companies are actively pursuing several emerging technology areas to improve performance, IBM said.

The survey shows that 79 percent intend to implement or have established goals to implement green IT solutions, while 71 percent said they have plans to implement web2.0/social media solutions and 69 percent said the same for cloud computing solutions.

And, according to IBM’s study, with companies of 500 or fewer employees generating about 60 percent to 80 percent of net new jobs annually over the last decade, these businesses could help pave the way back to economic growth for the IT industry.