SMBs Are Sensibly More Concerned with Biz than Tech

August 18, 2008 Timothy Prickett Morgan

This bit of news will come as no surprise to any IT Jungle readers who have run their own businesses or who work for small companies where money is a lot tighter than at larger enterprises, which always seem to have a lot more dough to spare for IT projects that may or may not pan out. According to research performed recently by IDC, SMB shops, which have IT budgets that are growing at least twice as fast as spending among larger companies, are more worried about the state of the economy than all the latest gadgetry or hot buzzword ideas.

To assess what SMB shops are and are not worried about these days, the analysts at IDC did a survey of SMB shops, and as it does for a living, it used the data from that survey to kick out a report, in this case called Taking the Temperatures of SMBs Worldwide: Regional Attitudes and Technology Interests, Mid-Year 2008. The survey was done among SMBs around the globe, because different geographical areas are experiencing different economic pressures and technology trends. And, predictably, SMB shops in North America, Latin America, and Western Europe all cited economic growth and business conditions as their greatest concerns–and by a wide margin–and are far less worried about green IT or virtualization or any of a number of other tech issues that IT vendors are trying to use as a level to sell their wares.

“While the growth of SMB investment in technology will continue to outpace spending growth in larger firms, economic and business conditions are on everyone’s mind,” explains John Roberts, research manager for global SMB research at IDC and one of the authors of the study. “Despite the global slowdown, SMBs across all regions need to look ahead to when the global economy rebounds. Most still have a near term focus, with only modest interest in technology areas that have been getting a lot of attention elsewhere.”

IDC’s survey gauged the concern for business conditions and the economy against green technology, software as a service, virtualization, and using “the Internet as a key business resource.” That latter item is so vague–and it is obviously already true for most businesses on the planet–that I wonder if it was thrown in there as a control. But anyway, this is IDC’s study, not mine. On a temperature scale–hot, warm, and cold–IDC says that even with minor variations across different geographies, SMB shops are cold when it comes to emerging technologies (like those cited above) but are warmer when the topic is economic issues. Small businesses, say the IDC researchers, are more short-term and tactical when it comes to investing of any kind, an approach to business that is being picked up by a larger number of midrange shops when the economies of the world become more challenging.

Using the Internet as a key business resource ranked highest among the four tech areas ranked in the IDC survey by SMB shops, but this question is so vague it is hard to say what it means. SaaS is an example of using the Internet as a new kind of tool, of course, and SMB shops seem more interested in this than in virtualization, which could take off in the next one or two years among SMBs. And as for going green, IDC thinks this will be a much harder sell among SMBs–particularly in developing economies where other issues are far more important.

While it is hard to argue with such sentiments, I think what will actually happen in the long run is more hopeful than IDC’s expectations might lead you to believe. I think that SMB shops have very little interest in paying a premium for virtualization or energy efficiency, just like they didn’t want to pay for fast Ethernet adapters, RAID data protection on disks, and other technologies that are built into systems “for free” but which we all know are part of the system to justify keeping average selling prices more or less where they have been for two decades in the X86 and X64 server market. I think SMBs will be happy to use and deploy server virtualization when it is integrated in a transparent way with the system and comes with a nominal fee, and I also think SMB shops will pay a slight premium for live motion and other high availability extensions to this virtualization. They will not–and I mean absolutely will not–pay the kind of premiums for hypervisors, management tools, and extensions that made VMware a darling on Wall Street for the past year.

Ditto for green IT. In aggregate, the tens of millions of servers at SMB shops are burning lots of electricity, just like the racks of X64 servers and mainframes, RISC, and other kinds of big iron boxes are in the data centers of large enterprises. So saving energy across these SMBs is just as ecologically sound an idea as it is for helping large enterprises save money by going green. But if you think SMB shops will pay a premium for such green window dressing, you’re crazy. Green IT should simply be the way that IT is done from here on out–not something you can charge a premium for. And when that happens, SMB shops will do their part, because, quite honestly, they have bigger problems than a few extra hundred or even thousand bucks on the electric bill a year.

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