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3/30/2011
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SMBs Boosting IT Spending, Hiring

Small and midsize business technology budgets are growing at the fastest rate since 2009, while one in three firms said they plan to hire IT staff during the next 18 months, according to a Spiceworks survey.

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IT spending by small and midsize businesses will grow 8% in 2011 compared with budget figures from the second half of 2010, according to a new Spiceworks survey.

Spiceworks, an IT-oriented social network, put the average SMB technology budget at $132,000 this year, compared with $121,770 in mid-2010. That's the largest percentage increase in spending plans in more than 18 months. Also of note: Just 19% of respondents reported shrinking IT budgets, down from 31% in a similar study that Spiceworks conducted in 2009. Meanwhile, 31% of SMBs plan to hire IT staff in the next 18 months.

"Budgets are looking really strong," Ted Nitka, director of business development at Spiceworks, said in an interview. "The big thing that we've seen in the staffing to support the budgetary increases is that about 15% or so -- which is a huge increase from what we've ever seen in the past -- is going to be part-time or flexible-force staffing."

Businesses with fewer than 20 total employees appear particularly eager to add IT staff -- 33% said they're hiring. About 17% of companies with between 20 and 99 workers are posting help wanted signs, and 18% of firms with more than 100 people plan to increase their IT departments.

As both the IT budgets and staffs of SMBs grow, so do their use of cloud and hosted services. Spiceworks makes this distinction between the terms, which tend to be used interchangeably. Hosted means a single service on a single dedicated server -- in other words, the customer could walk into the data center and point to their server and say "mine." Cloud services, on the other hand, mean they're spread across multiple shared servers.

Around 28% of SMBs in the survey said they're using cloud services, double the rate reported in a similar survey Spiceworks conducted in mid-2010. The company projected cloud adoption to hit 42% by mid-2011. Web hosting topped the list of cloud services -- 39% of SMBs host their websites in the cloud, with another 14% planning to do so by midyear. Email (32%), backup and recovery (25%), and applications (29%) were also popular.

Dedicated hosted services, on the other hand, accounted for almost one-fourth of IT budgets. About 65% of SMBs will add, upgrade, or renew hosted services in 2011, according to Spiceworks. Email was a shining star -- two in five SMBs plan to purchase, upgrade, or renew hosted service this year.

With additional human and financial resources in the fold, SMBs are also embarking on virtualization projects in greater numbers, with 54% reporting some form of virtualization already in production and another 20% planning to deploy the technology by the middle of 2011. The current adoption rate represents only a small uptick from a similar poll in mid-2010, but Nitka noted that at the time 68% of respondents had said their environment would be at least partially virtualized by the end of last year.

"More people were planning on using it, but they just either never got around to it or their budgets didn't permit them do it," Nitka said. "The planned use of virtualization being at 74% reflects both people who are new to virtualization as well as that pent-up demand."

The Spiceworks survey included 3,000 IT professionals worldwide at companies with fewer than 1,000 employees. The average IT staff size among respondents was three full-time people. Nitka said that increasing adoption of cloud and hosted services -- as well as the apparent rise in part-time IT hiring -- points to SMB owners and managers who are ready to invest in new technologies but worried about knowledge gaps and overstaffing.

"That shows to us a deeper level of awareness and expertise [among SMBs] in saying: 'I want to tightly manage my IT environment in such a fashion that I'm not overstaffed and at risk of being a glut on the business,'" Nitka said.

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