Big Companies to Spend on IT Hardware

About four out of five midsize and large companies plan to buy IT hardware in the next six months—a statistic that is in stark contrast to recent analyst reports of hardware sales declines in 2009.

The note of optimism comes out of the CDW IT Monitor, CDW’s bimonthly survey of 1,000 IT professionals about their spending plans and the value of IT within their organizations.

“There is some light at the end of the tunnel,” says Mark Gambill, the CDW vice president in charge of the direct market reseller’s survey. “Now, keep in mind, it’s a 40-watt bulb versus a 100-watt bulb.”

The survey shows that 78 percent of midsize businesses (100 to 999 employees) say they plan to buy IT hardware in the next six months, up 1 percent from the last survey. And 82 percent of large enterprises (1,000 or more employees) say they plan to buy IT hardware in the next six months, down 2 percent from the previous survey.

By contrast, only 32 percent of small businesses say they plan to buy IT hardware in the next six months, down 8 percent from the last CDW IT Monitor survey. These results match up with Channel Insider’s Market Pulse survey of solution providers that shows small business has pulled back the most. Yet there may still be opportunity in the small business market, according to Gambill.

“We have seen and heard that the majority of companies have expanded their refresh cycles,” he says. “It doesn’t get replaced until it’s broken.” And larger companies are likely to have access to unused PCs left behind by laid-off employees. That means that even if something breaks, there are other assets that can be used before the company must purchase anything new.

But, Gambill notes, CDW’s own CIO recently approved some purchases of new Cisco Systems equipment because what had been in place had broken down. Companies still will replace essential equipment that breaks.

However, small businesses that are more likely to run lean already are less likely to have unused PCs available. So if something breaks for them, says Gambill, they are more likely to buy new equipment.

On the software side, 78 percent of midsize businesses and 87 percent of large enterprises say they plan to purchase new software in the next six months, which represents no change from the last survey. Gambill says that these larger businesses are in a stronger position to spend on initiatives that can deliver return on investment, such as virtualization and server consolidation.

Only 47 percent of small businesses say they plan to purchase software in the next six months, an 8 percent decline from the previous CDW IT Monitor survey.

“Small businesses are cash-strapped,” says Gambill. “They don’t have the luxury of eliminating people to save dollars. They have to be lean with hardware and software purchases.”

The government sector is showing a little more optimism, says Gambill, as IT organizations there prepare for the expected funding coming from the Obama administration’s economic stimulus package.

According to the CDW IT Monitor survey, 80 percent of federal government IT decision makers plan to purchase hardware in the next six months, and 69 percent of state government IT decision makers plan to purchase IT hardware in the next six months.

However, in spite of the optimism and expected investment, IT decision makers in state governments are feeling less optimism than their counterparts in federal government.

CDW blames the difference on the combined impact of decreased sales tax revenues and increased unemployment benefit payments. 

The overall CDW IT Monitor number—which measures future IT expectations and the value of IT in achieving organizational objectives—recorded a 1-point decline this time around to 69.