Report: Smaller Businesses Getting Smarter About Their IT Dollars - InformationWeek

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1/29/2008
09:25 AM
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Report: Smaller Businesses Getting Smarter About Their IT Dollars

Amid all the reports predicting that companies are going to be increasingly cautious in their IT spending this year, is one focused on small and midsize businesses. It's conclusion? Smaller businesses are learning that IT could help them grow.

Amid all the reports predicting that companies are going to be increasingly cautious in their IT spending this year, is one focused on small and midsize businesses. It's conclusion? Smaller businesses are learning that IT could help them grow.Reports indicate that IT spending in 2008 will either stay flat or increase slightly and research firms, that initially predicted fairly healthy IT spending this year, have been scrambling to revise their estimates downward.

But AMR Research recently released its annual study on small and midsize business IT spending and it reports that 64 percent of small and midsize businesses "will increase their IT spending by an average of 5.3 percent in 2008."

What is really interesting in AMR's findings is how smaller businesses plan to allocate their IT dollars. According to the study: "Currently, SMBs are focusing the majority (49%) of their budgets on applications that help them run their businesses. But applications that support innovation (25%) and growth (26%) are increasingly important as well."

Simon Jacobson, a senior research analyst at AMR Research, comments on this finding: "Traditional thinking and spending patterns have led us to assume that SMBs prefer to maintain current levels of IT investment and focus primarily on running the business. But this year's respondents indicate an even split between running the business and the desire to innovate and grow the business. This is intriguing for a market segment that has traditionally been characterized as 'strapped for IT resources' and focused largely on sustaining current market position."

Smaller businesses need to innovate and grow if they want to compete with their larger sized competitors. And, despite always needing to keep an eye on their vulnerable bottom line, it seems that many -- or at least more -- smaller businesses are finally listening to their IT guys who have been telling that they have ways to do that.

The AMR study indicates how. It reports: "The most strategic software investments for 2008 will be in customer management applications (18%), an investment that reflects the increased customer demand many SMBs are facing. But, according to the report, companies are planning to focus their strategic investments in business intelligence (BI) and performance management (PM) applications in 2010."

Are you letting your IT department help you innovate or grow?

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