Report: Economic Downturn Forces SMBs to Delay or Reduce IT Spending

A recent IDC (News - Alert) study, entitled, “Impact of the Changing Economy on SMB IT Spending: Who is Being Affected and How?” indicates that the economic downturn in the U.S. is affecting the priorities and plans of the small and medium business (SMB) for technology acquisitions.

 

The IDC survey and analysis mainly discusses the attitudes of small businesses (fewer than 100 employees) and medium-sized businesses (100-999 employees) towards the present and expected state of the United States economy - over the next year to 18 months.

 

According to the IDC report, 38 percent of small firms and 42 percent of medium-sized businesses are expected to delay or reduce IT spending. This impact is observed to be intense with variations by company size, industry, and attitude segment. The report shows that businesses in the architecture/engineering, legal, retail, and manufacturing sectors are expected to delay IT spending, whereas wholesale, insurance, and legal firms are expected to reduce IT spending.

 

"The majority of SMBs are extremely or strongly concerned about the current and expected state of the U.S. economy over the next 12 to 18 months," said Justin Jaffe, senior research analyst for SMB programs at IDC. "Although SMBs are expected to drive greater growth in IT spending than the corporate IT market overall, it will be critical for vendors to understand how changing economic conditions will impact the spending habits of companies of certain sizes, vertical industries, and attitudinal characteristics."

 

The IDC report also reveals that SMBs in the current scenario are expected to focus IT investment primarily on tactical projects that deliver immediate benefits.

 

As a result of the current recession, there is an urge to save for the small minority of SMBs, which indicates that they will look more closely at hosted solutions. But, cloud computing initiatives are not being driven by economic concerns yet.

 

According to IDC, less than 50 percent of SMB 2.0 firms are more concerned about the U.S. economy, compared with approximately 70 percent of IT indifferent firms and 60 percent of pragmatist firms.

 

IDC, subsidiary of IDG, provides market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. It helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy.