CDW has discovered some interesting trends in the SMB market that reveal a number of potential opportunities for the channel. Coupled with another CDW study from two weeks ago, the super-VAR -- 2008 sales of $8.07 billion -- paints an optimistic picture for the sale of IT products and services.

The 2009 CDW Report on Small Business Resilience identifies management and information technology infrastructure factors that contribute to business survivability and studies how small businesses are responding to the economic recession. Based upon a survey of 613 small businesses nationally, the report states that just 45 percent of small business owners are optimistic about their prospects for growth throughout the next five years and that they are shifting marketing and operating strategies to address the rocky business climate. In addition to economic threats, the report indicates that small businesses often contend with structural vulnerabilities that affect their resilience even in good times, including over-reliance on their top leadership, a lack of structured business processes and risky under-protection of critical information.

"What we see overall is that when it comes to small business, the day-to-day activities can hamper planning," says Lauren McCadney, CDW's senior director, small business marketing. More significantly, the study provided detailed information about the challenge of knowledge transfer and lack of business continuity capabilities in SMBs.

Management resilience is a major source of concern for SMBs. CDW reports that most small businesses rely too heavily on their top executive or partner, but only 23 percent of respondents expect their operations and sales would continue normally should they lose their company’s owner or top executive for six months or longer, while 31 percent expect they would face a significant chance of company failure and 16 percent said their company would almost certainly go out of business.

The problem, states CDW, is that 62 percent of small businesses do not have a knowledge management strategy, the systematic approach to identify, preserve, share and leverage essential information as well as insights from key personnel. And only 35 percent have business continuity/disaster recovery (BC/DR) plans to prepare them for unexpected business disruptions such as natural disasters, fires or manmade catastrophes.

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The report found that 99 percent of small business leaders believe that their businesses could recover their data in the event of a major loss, but other responses indicate that belief is highly suspect. For example, 73 percent of those with computing networks have neither onsite nor offsite data backup (65 percent of respondents have computing networks) and 29 percent have no backup power for their data center or data storage. Even among businesses that report having BC/DR plans, 33 percent make no provision for restoration of data and computer systems, 32 percent do not include offsite data backup and 16 percent include no regular backup of critical data at all.

CDW says the recession has spurred owners to re-configure their strategies and tactics in ways that will help them once the economy rebounds. It believes that businesses could significantly increase their resilience – in good times or bad – by doing more to capture, preserve and share the knowledge and insights that their principals accumulate throughout years of experience.

"It really helped us understand the order of magnitude of the challenges in the marketplace… and areas we will focus on next year." With the ratio of overall staff to IT around 75-80 to 1, McCadney said CDW -- and by extension the channel -- can provide the extra resources needed to help businesses understand what's required and help put together the strategic plans.
 
Based on the study findings, married with CDW's experience with business owners and IT pros, McCadney sees three major opportunities for the channel. The first is a refresh of basic technology like notebooks, desktops, servers.

"We've gone through this very turbulent time in the last 24 months and purchasing and reinvestment had to be postponed. We now have a lot of aged equipment in place and have pushed this to the brink. I think this bodes well for a refresh we will have to see."

The second opportunity centers on protecting the network, data and gateway. "This is where companies are really vulnerable." McCadney said somebody described their company's situation as being just one keystroke away from disaster.

She calls the third opportunity 'expand technologies', where a company starts to grow and things such as server virtualization and business continuance come into play. "I think SMBs will be looking more and more at these solutions." In addition to server virtualization BC/DR, McCadney said VoIP and convergence were also getting a lot of interest.

Some of the other findings in the SMB study include:
-    SMBs account for half of the U.S. workforce and 30 percent of respondents say they have reduced their staff
-    An additional 20 percent report that they have reduced staff compensation and benefits without implementing layoffs
-    61 percent have reduced other operating expenses
-    22 percent have cut capital spending in areas other than IT
-    12 percent say they have cut IT spending; and
-    14 percent say they have invested in new IT tools in order to increase business efficiency.

There has been shift in marketing and sales tactics toward one-to-one engagement of customers, with 56 percent of respondents saying they have increased direct sales outreach to their clientele.
Marketing is increasingly online as well, as 48 percent increased social media and Web 2.0 activities, 47 percent are enhancing their Web sites, and 44 percent are increasing use of e-mail marketing.

Just over a week ago CDW released the findings of another study that predicted a significant rise in hardware and software purchasing in the next six months for corporate and government sectors. In a survey of 1,000 IT decision makers, 67 percent of those in the government and corporate sectors are reporting they will make hardware purchases in the next six months. The least amount of IT spending will be coming from small companies, with 41 percent making hardware purchases and 53 percent making software purchases. The numbers for medium and large companies are much more robust -- 75 percent of medium-sized companies will be buying hardware and 76 percent buying software. The largest companies are a bit higher, with 81 percent spending on hardware and 85 percent spending on software.

McCadney is very optimistic about the future. "I feel very encouraged about the next 12 months … (and I) never cease to be amazed by how resilient small businesses are."