Small Business IT Survey: Optimistic But Overloaded

Thursday Aug 12th 2010 by Stuart J. Johnston
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The results of a recent survey indicate that small and medium businesses see the economy strengthening, but still ponder how they can best leverage their technology dollar.

First, the good news: a large number of small and midsized businesses (SMB) are optimistic about the next year and are planning to spend more on technology services and solutions during that time than they did in 2009.

The bad news is that many of them are already jammed up with information overload and haven't been able to fully take advantage of insights that could be gained from data they already have.

"SMBs are very confused -- often they can’t figure out what solutions will best help meet business challenges and goals," reads the executive summary of a recent survey of 475 SMBs.

Titled "2010 Small and Medium Businesses Routes to Market Study," the survey was conducted in collaboration between the SMB Group, a recently founded analysis firm that focuses on the SMB market, and Internet inbound marketing company Hubspot.

SMB Group was formed in early 2010 by experienced analysts Sanjeev Aggarwal and Laurie McCabe. (Ms. McCabe is a regular contributor to Small Business Computing.)

Conducted in June, the survey defines small businesses as companies with 99 employees or fewer, and medium-sized businesses as having between 100 and 1000 employees.

Small Business Computing promoted the SMB Group survey in June.

IT Survey of Small Businesses

Among the top-line results, the survey found that 75 percent of SMBs have an optimistic outlook on business, and fully half (50 percent) expect revenue to grow by 10 percent or more over the next 12 months.

Additionally, 50 percent of SMBs said they are planning to increase their investments in technology services and solutions by between 1 and 20 percent during that year-long period.

Breaking it down, 36 percent of small businesses said their top challenge is to "increase revenues," with "attracting new customers" coming in a close second at 35 percent.

For the smallest small businesses -- those with 19 or fewer employees -- third place was "improving cash flow," while companies with between 20 and 99 employees said their third-largest challenge was to "maintain profitability."

Little surprise, then, that 35 percent of all small businesses polled said that their top technology challenge was to "get better insights from existing data." That was followed by "Figuring out how different solutions can help the business," and "Implementing new solutions/upgrades," both with 32 percent.

"These challenges were just as significant in medium businesses as in small ones, despite the fact that most medium businesses have IT staff, larger IT budgets and better access to external technology advisors," McCabe said in a statement.

"As a result, newer channels, such as application marketplaces and social media are taking off as key sources for information and guidance as SMBs try to get better insights before they purchase," she added.

Given the tenor in the marketplace and the continuing recession, it's little surprise that, for the past two years, the survey found, SMBs have been investing in "customer facing" applications. After all, increasing revenues, bringing in more customers, and maintaining profitability are all goals that could be fulfilled by reaching out to existing and potential customers.

SMB Group's study is not the only one taking a more positive outlook on the economy. For instance, a Microsoft-sponsored survey of 500 SMBs published in April found that 63 percent of those surveyed planned to spend more on IT in 2010 than they did in 2009. That constituted a 38 percentage point jump from SMBs' spending plans a year earlier.

Going forward, though, while investments in customer-facing applications will remain strong, small businesses said they plan to spend more on infrastructure and collaboration solutions. In contrast, midsized businesses plan to invest in more business analytics.

Social Media Catches On

Interestingly, many small businesses view social media as a major resource for both online marketing (46 percent) and collaboration (42 percent). Running ahead of even social media, however, was "colleagues in industry," according to more than 50 percent of the small businesses polled in the SMB Group study.

In terms of where small business persons get information, the top resource cited was search engines with 88 percent listing them as their number one choice. Under the heading of "relatively influential," LinkedIn and Twitter tied with 61 percent of small businesses using both services. Facebook came in a very close second at 59 percent.

Meanwhile, smartphone applications marketplaces, along with online marketplaces for business applications, are here to stay as well. "More and more, this [applications purchasing] is moving to the Web," McCabe told Small Business Computing.

Among small businesses, 52 percent said their companies either already used online business applications marketplaces or are planning to, while 49 percent said the same for smartphone apps marketplaces.

When it gets down to the nitty-gritty of actually spending money though, price remains the most important feature for small businesses.

For small businesses, the top reason a particular solution made their short lists was "better price" according to 39 percent of those polled. By comparison, only 26 percent of midsized businesses picked price.

Price is still the big driver for small businesses and budgets remain tight," McCabe added.

The report's executive summary is available online (as PDF).

Stuart J. Johnston is a contributing writer at InternetNews.com, the news service of Internet.com, the network for technology professionals. Follow him on Twitter @stuartj1000.

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