Small Biz To Boost IT Spending In 2012, Says Computer Economics

December 5, 2011 Timothy Prickett Morgan

Small businesses are like birch trees: they are the first to wander out into a new field and turn it into a forest. And as such, small business spending can be thought of as a leading indicator for economic recovery, and perhaps more importantly, create new jobs and, even more importantly for IT vendors, they also tend to invest in computers, software, and other gadgets at a faster pace than larger organizations during economic downturns.

The prognosticators and pulse takers at Computer Economics just completed a survey of 157 organizations, most of them in the United States and Canada, to figure out what the IT spending sentiment is out there right now and to use the data as the basis of its IT Spending and Staffing Outlook in 2012 report. That report is not free, of course, but like other consultancies, Computer Economics lets out a few tidbits of data to the press to try to scare up some business for itself.

According to the latest forecast for IT spending in 2012, the story is much the same as in 2011. With IT operational budgets growing slowly, capital spending on new equipment being curtailed, and hiring remaining “anemic,” as the company put it. In 2011, the larger companies were more aggressive about IT spending, according to Computer Economics, but this coming year, it looks like the small businesses are being more optimistic about the IT situation–or perhaps are in a place where they simply have to spend more to update their systems, software, and people.

“Small business spending often precedes a recovery, so this is a positive indicator,” explained Frank Scavo, president of Computer Economics, in statement accompanying the executive summary of the report. “But there is a great deal of economic uncertainty, due in part to the European debt crisis, which leads IT executives to remain cautious with their spending and hiring plans.”

A 2 percent increase in the operational budget is nothing to go to the roof and shout about, but that level of increase projected by small businesses is a lot rosier than the half point of growth by midrange shops and eight-tenths of a point forecast by larger enterprises. As far as Computer Economics is concerned, a small business ranges in size from $40 million to $350 million in annual sales, while those with between $350 million to $1 billion in sales are midrange companies and large enterprises have $1 billion or more in sales. It would be interesting to see what is going on at the millions of companies that make far less than $40 million a year.

It is hard to say if 157 companies is statistically significant to case the world’s IT spending plans with great accuracy; 97 of those surveyed for the report came from North America, so this data may be more representative.

The full 2012 spending report, which you can get here, costs $295 and covers operational and capital budgets and IT staffing plans.

Personally, I would think that as infrastructure and platform clouds become more mature and whole cloud-based apps become available, small businesses would simply say the heck with investing in any IT at all and just use cloudy services. That’s what I would do at these prices. If you can fully utilize hardware and have substantial needs, you can still make a credible argument to invest in your own IT wares. But for the smallest companies that lack IT skills and the budget to create basic infrastructure, much less the applications that animate their businesses, buying IT means getting a tablet, notebook, and smartphone and leaving all the other stuff to a service provider. It will be interesting to see if the operational budget optimism that Computer Economics sees is related to the move by SMBs toward the cloud so they can get the economy of scope and scale advantages that were previously only available to larger enterprises rolling their own IT utilities.