infoTECH Feature

January 19, 2009

Small Business IT Budgets in 2009: 1/3 Up, 1/3 Down, 1/3 No Change

By Gary Kim
Though it is possible decision-makers have changed their minds since late November, as of that period, nearly a third of 2,000 U.S. IT decision-makers in businesses of all sizes said they expected their 2009 budgets would increase over 2008 levels, according to research from Compass Intelligence. Most respondents expect their 2009 budgets to be the same as what they had in 2008, while another third expect a decrease. Respondents indicating they will decrease budgets are about twice the percentage indicating shrinking budgets for the 2007 to 2008 period, Compass Intelligence says.
 
This is slightly more than the percentage that said their budgets rose between 2008 and 2007. However, 2009 ICT revenues will not come easy and are likely to be earned after the 1st quarter of this year because IT decision-makers also indicated they will cautiously plan their investments in the first couple of months.
 
That data is consistent with some other evidence that small businesses increased hiring throughout 2008, typically an indicator that spending will increase.
 
"This isn't the first time that we've seen a recession in the last decade, and most ICT decision-makers have been in troubled times like this before - so have the line-of-business managers influencing them," says Kneko Burney, Compass Intelligence president.
 
"Most IT and Business decision-makers are planning to spend through this slow-down, knowing that only through investments in cost-saving technologies, gains in productivity, likely through automation and innovation, will their companies survive this difficult period, and more importantly, potentially prosper when it's over," says Burney.
 
Key areas of spending priority for 2009 are computer systems, wireless applications and services, business Web sites or Web infrastructure and business networks according to the IT decision-makers surveyed.  The order of key priorities varies among size of business, but the top four priorities are, for the most part the same, regardless of business size, Burney notes.
 
U.S. IT Spending is expected to grow more than four percent by the end of 2009 and growth is expected to continue to rise through 2013, Compass Intelligence says.
 
Growth will tend to stem from small and mid-sized companies and less from enterprise businesses. While the total U.S. IT market will grow 4.1 percent in 2009, enterprise spending will account for just 2.8 percent of spending growth.
 
Enterprise businesses, despite their slower growth in spending, will remain the largest spending category.

Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary's articles, please visit his columnist page.

Edited by Jessica Kostek
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