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6/2/2011
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SMBs To Spend $125 Billion On IT

Mobility, PCs, and networking are driving U.S. spending growth in 2011, but SMBs don't expect to add a lot of IT staff, according to an IDC report.

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IT spending by small and midsize businesses in the U.S. will total more than $125 billion in 2011, according to new data from IDC.

That's a $5 billion increase from 2010, good for a year-over-year growth rate of a bit more than 4%. If the projection bears out, it will mark two straight years of increased IT spending by SMBs following a prolonged period of belt tightening during the global recession. SMB technology budgets decreased 4.2% in 2009, according to IDC. While the recovering economy is certainly a factor, IDC senior analyst Justin Jaffe said it's not the only one--nor is the spending increase necessarily all good news for IT pros who support smaller offices.

"It's a combination of forces, including cautious optimism about the economy and a growing willingness to spend on IT, especially compared to increasing staffing levels," Jaffe said in an email. "In fact, the smaller the business, the more likely the balance tilts more towards technology spending growth."

While 70% of small businesses (1-99 employees) expect staffing to remain flat, just 50% expect technology budgets to likewise stay static, according to Jaffe. That potentially means that as SMBs begin investing again in infrastructure and other technology areas, they're not necessarily hiring more people to support the new purchases. That could simply indicate that SMBs will replace legacy technology with new. Or it could point to small businesses, in particular, asking existing IT staff to support additional hardware and applications without additional help, or leaning more heavily on vendors outside the company.

Mobility, PCs, and networking are the key areas driving 2011 spending growth at SMBs, according to Jaffe. Notebooks are in particularly high demand; IDC projects the form factor will surpass desktops in smaller offices, with 4.7 million SMBs expected to be using notebooks by 2015. In spite of the current hype surrounding tablets, the devices don't appear to be an immediate threat to notebook usage.

"Notebooks remain one of the fastest-growing categories in terms of SMB ownership," Jaffe said. "The potential of tablets in SMBs remains to be seen, but preliminary survey results suggest high growth and high interest out of the gate."

Among other noteworthy spending trends, Jaffe said that server-based local area networks are now quite common in companies with 10 or more employees, a relatively new phenomenon in smaller firms that have traditionally relied on outside vendors.

"Five years ago, that level of penetration came only once firms reached 50 employees," Jaffe said. IDC attributes the adoption change to the increasing number of inexpensive, entry-level servers available in the marketplace.

Server virtualization, meanwhile, would appear to be gaining faster traction in midsize businesses with more than 100 employees.

"Average server count in midsize firms has remained relatively stable in past few years, even as average count in small firms has increased," Jaffe said. "Server virtualization in the midsize business segment would account for this."

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