CDW Survey Says Small Business IT Spending to Rise

Tuesday Sep 28th 2010 by Stuart J. Johnston
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More small business owners are buying those extra PCs they've needed, and that's driving a loosening of the purse strings. Plus, Microsoft Windows 7 may be contributing to that trend.

Despite continuing signs that the recession is not quite finished, small business technology decision makers are beginning to show more optimism -- which may be an indicator that the darkest economic clouds are at least thinning.

In CDW's latest bi-monthly survey of IT sentiment, the technology solutions provider found that 27 percent of small businesses with between 1 and 99 employees plan to expand their IT budgets over the next six months.

That's a 3 percent gain since the last CDW IT Monitor came out in late July. The latest number also represents an 8 point gain from this time last year, according to Matt Troka, vice president of product and partner management at CDW.

"We're starting to see the small business portion [of the IT industry] ramp up spending," Troka told Small Business Computing.

Additionally, 36 percent of small businesses that participated in the survey said they plan to purchase new computer hardware within the next six months -- another harbinger that, at least for small businesses, the downturn has begun to turn up, if only a little.

The latest survey also found that 51 percent of small businesses plan to purchase new software in the next six months.

"A lot of the technology that people have is three-plus, and even five-plus, years old," Troka said, pointing out the performance gains that computing technology has made in the interim.

More Hiring Ahead

Perhaps most telling, however, is the shift in staffing plans. In the June survey, only 2 percent of small businesses said they were planning new IT hiring in the next six months.

In contrast, the latest survey found that the number of small companies expecting to make new hires over the next six months had jumped to 5 percent -- perhaps to staff up for new hardware and software installations.

By comparison, the percentage of larger small businesses with between 100 and 999 users that expect to hire more staff held steady between the June and August surveys at 24 percent.

Some of that hiring may be at least partly driven by the Windows 7 "refresh cycle," which now is beginning to swing into gear. In late July, Microsoft (NASDAQ: MSFT) announced it had already sold 175 million Windows 7 licenses. While most of those were consumer purchases with new PCs, company executives confidently claimed that the corporate refresh cycle, which is expected to take two to three years, is "underway."

Additionally, Microsoft began public beta testing of Windows 7 Service Pack 1 (SP1) in late July.

However, many veteran IT managers typically postpone deploying a new version of Windows until the first service pack is released, in order to make sure all of the glaring bugs are fixed before putting it to work.

Microsoft has not yet said when SP1 will be available. But when that occurs, given the high popularity of Windows 7 with consumers, most industry observers expect deployments -- including at smaller firms -- to jump -- meaning increased spending on small business technology.

Other Poll Support for SMB Buying Trend

A survey of Small Business Specialist reseller partners sponsored by Microsoft last spring yielded figures that underline that thought.

The Microsoft SMB survey, which polled 500 partners in February, found that the resellers expected 63 percent of their SMB customers to spend more on IT this year than last year -- and part of what was driving their expectations was the growing acceptance of Windows 7.

Additionally, sales of new desktop hardware and software trigger purchases of other IT gear -- 44 percent said they expect Windows 7 adoption will lead to more new server deployments.

CDW began publishing its CDW IT Monitor in Dec. 2007 when the recession began, according to company statements. CDW describes it as "a bimonthly indicator of the direction, momentum, and mindset of the U.S. IT marketplace."

The CDW surveys are conducted by Richard Day Research, an independent polling firm. The most recent survey polled 1,052 IT decision makers at small, medium and large companies as well as local, state and federal governments, between July 26 and Aug. 2.

"Despite the struggling economy, it's reassuring to see signs of hope within the small business sector," Thomas E. Richards, president and CDW's COO, said in a statement. "Although this is just the first step in a long journey toward a recovery, we are encouraged by the increased confidence at the small business level and hope to see an improved IT marketplace emerge in the near future."

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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