From Must-Have to More with LessBy Pedro Pereira | Posted 2008-11-13 Email Print
The economic downturn has changed the business outlook, pressuring solution providers to help businesses get more out of IT.
It's hard to believe only two short months ago the level of optimism in the business world was light years away from the current mood.
Even though the economy already was shaky before the collapse of a handful of banking institutions in late September that seems to have caused a global recession, we hadn't quite reached the sense of doom that followed. Unemployment is growing, the stock market keeps acting like a yo-yo, retail is down and credit keeps getting tighter.
So it was surprising to get a news release this week from the Computing Technology Industry Association (CompTIA) with optimistic predictions for the coming year. Based on a poll of 777 small and midsize businesses in the United States, Canada and United Kingdom, the study indicates that though cautious about IT spending, respondents were nevertheless optimistic about expansion plans 12 months out.
A closer look revealed the survey was conducted in September, and since the financial catastrophe didn't come until later in the month, it became clearer why the results seemed so optimistic.
The study found that 85 percent of SMBs polled were planning to hire new employees over the following 12 months, 54 percent anticipated revenue growth of at least 10 percent or more, and 40 percent were planning to open new business locations.
It's highly unlikely many of those companies would give the same responses if they were polled today.
With credit getting tighter and sales on the decline, small and midsize businesses are putting off some IT expenses while looking at ways to get the most out of their investments in IT services and equipment. The mentality is shifting from must-have to do more with less.
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Already, when asked for the CompTIA survey in September, SMBs were tempering their IT spending expectations for the coming year.
The CompTIA study found that 51 percent of companies planned to increase spending in the following 12 months, while 49 percent expected spending to remain flat or to decline. By comparison, 62 percent of SMBs said in an identical study in 2007 that they planned to boost IT spending, while 38 percent were looking to keep it flat or lower.
Again, the numbers likely would be different if the poll were conducted today.
Nevertheless, Saru Seshadri, president and founder of Ultramatics, an SOA-focused solution provider in Oldsmar, Fla., says his company has felt little effect from the slowing economy. Still, Seshadri concedes, predictions for 2009 are tricky because customers are getting reticent about spending.
Research firm IDC has just revised its 2009 technology spending forecast. Having predicted in August that spending would grow at 4.2 percent next year, IDC now is forecasting a modest .9 growth rate. The worldwide forecast was adjusted to 2.6 percent from an earlier prediction of 4.2 percent.
No question, the road ahead looks rough. The only salvation for the IT channel is the business world's dependence on technology, and that goes for enterprises, small businesses and everything in between.
"In the past," says CompTIA President and CEO Todd Thibodeaux, "tech spending might have been one of the first line items slashed in a tough economy." The picture is different today, he notes, because SMBs are so much more reliant on technology.
That reliance notwithstanding, small and midsize businesses are looking to stretch their IT dollars. For solution providers, that means deploying technology that helps businesses balance bigger workloads for smaller staffs without eroding customer service, says Seshadri.
It's a tall order, but it's the new reality. Adjusting to it is a matter of survival.
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"You can't just hunker down and do nothing," says Seshadri. "That itself is a no-win proposition."
Pedro Pereira is a contributing editor for Channel Insider.