2010 IT Planning for Small-to-Medium Business

SMB Research just completed a survey for 2010 IT Planning for Small-to-Medium Businesses (SMBs).   We gathered over 40 responses which were made up of primarily IT executives and managers.   We did find some similar results when compared to studies by other research firms or publications that had a much larger survey base of hundreds or thousands.   As there is no shortage of research on SMB IT plans for 2010, SMB Research has highlighted some of these other studies as a comparison.  Hopefully, this analysis will help validate what is the reality.   We also provide some depth into the differences in key IT planning topics between small SMB’s and larger SMB’s.

The survey base essentially consisted of two camps, companies under $50M which in some cases had their president as a key IT decision maker and then manufacturers with revenue between $50M and $600M where we contacted CIOs and IT managers. The two camps had many similarities but noticeable differences as well.

We focused on a few key topics such as IT planned initiatives for 2010 and more pressing concerns with the 2010 vendor/technology landscape.  Of the survey base, the largest group represented was High Tech followed by Services such as Legal and Financial.  Manufacturers such as Industrial and Chemical/Process combined for one third of the responses.

The Key IT Initiatives for SMB’s in 2010

In overall SMB, both very small (under $50M) and medium sized ($100M to $600M), a number of key initiatives were significantly mentioned including Customer Management, Enterprise Resource Planning, Desktop Management/Infrastructure, and Business Intelligence & Knowledge Management.     Overall these 4 categories made up around 80% of total activity.    Areas like Product Data Management and Enterprise combined for another 10%.  At this size company of under $600M, topics like Manufacturing, Supply Chain and HR existed but were not that common.   In ERP, upgrades and implementations were noted and in CRM a number of SMB’s were going through system selections.  Knowledge Management and Document Management rounded out the mix for popularity in overall Small and more midsized SMB’s.   The above percentages were supported by some Forrester Research findings published by ChannelWeb in February 2010 . 1

http://www.wap.crn.com/showArticle.jhtml?articleID=223100162

On the ERP front, we included financial and accounting software, and our 20% compares to 21% for finance and accounting that ChannelWeb found.   This study was of 2,200 both Small and Larger enterprises so a very sizable base of SMBs nonetheless.   In their study they found that 19% of SMB’s were planning to upgrade their CRM system (vs. our 18%).   Similarly, ChannelWeb found that 20% of SMBs were planning to implement Knowledge Management systems (vs. our 18%). IDC recent reports also listed Intelligence Business Solutions as an area of focus to help rebuild SMBs centering on providing insightful information by integrating data sources to manage the business.  2

http://chaitrav.com/2010/02/5-it-spending-areas-in-2010-by-smb’s

In terms of key areas of interest behind these major categories, on Desktop Management/Infrastructure, SMB saw a lot of activity in Backup and Recovery best practices as well as well as Windows upgrades and new phone system.   The IDC 2010 SMB IT planning research had Infrastructure as one of the Top 10 areas for this year as companies need to invest in storage, networks and security to support their other initiatives.

http://www.horizonwatching.typepad.com/horizonwatching/2010/01/idc-worldwide-smb-market-top-10-predictions-2010.html

One could argue the lack of Manufacturing and Supply Chain activity indicates that these areas do not have the vendor opportunity and importance/focus for SMB’s, particularly under $600M where these results centered. 3

Other Interesting SMB findings from other Technology Research Firms

Software as a Service (Saas) was mentioned among respondents and we feel it is part of the major initiatives such as CRM or ERP.   A CompTia survey of 400 SMB’s found that 30% of companies planned to implement a Saas solution in 2010 to take advantage of costs and be able to be more competitive in the market.   CompTIA findings also showed the 42% of companies did not have a formal IT department.  As a lot of the IT activities are part-time, the ease of use of Saas does make a lot of sense.   4

http://www.comptia.org/News/PressReleases/10-01-14/SMBs_Embracing_SaaS_Managed_Services_CompTIA_Study_Reveals.aspx_Reveals.aspx

SMB Research found that CompTia survey based and industry focus was similar to ours.  For them, respondents were in business with 10-499 employees in manufacturing, finance, insurance, healthcare and government.  We had a similar broad mix and while we had a few companies with over 500 employees, it was only about 15%.

Some other firms pay close attention to overall spending in dollars including IDC that expects SMB IT spending to grow similar to the economy at 3.7% which is much better than the 4.3% decline in 2009.

Industry Specific Activity with SMBs

SMB Research noted that for SMB’s over $50M, some areas were much more prevalent and others less prevalent.  For example, ERP was the largest category at about 30%.  While a number of industries seems to be active in ERP decisions, Industrial was the most prevalent.  ERP and Business Intelligence/Knowledge Management, which had good activity in all noted industries, combined for 50% of the top initiatives.   Product Data Management responses doubled among the larger SMB’s in industries such as High Tech, Industrial, and Retail.  The categories that were less noted in the larger SMB’s than smaller SMBs included Customer Management and Desktop Management/Infrastructure.

2010 Technology Landscape Concerns

SMB’s do have some noticeable concerns with the 2010 Technology Landscape.   Vendor Viability/reliability was listed the most often at 26%.   Insecurity over disruption and change management and also industry consolidation combined for another 40%.   The remaining concerns had to do with getting expertise advise, delivery models, effective selection, and ease of use.

So for SMB’s, both smaller ones and the larger ones were most concerned with vendors capability to deliver, the ability to get system adoption in an implementation, and the trend toward vendor consolidation which increases their uncertainty and unease in technology investments.

CompTIA asked a similar question around the relationship with the vendor.     They found that 86% of respondents demanded partners that closely understood their business needs and 83% wanted the partner to provide a scalable solution.   We believe this important SMB message is also reflected in our study around vendor viability & reliability, expertise advise,  and ease of use.

SUMMARY

While some of the noted studies consisted of 400 and 2,200 respondents vs. our sample size closer to 50, the results were remarkably similar. So we hope this multiple consensus helps validate these overall findings so you know what technology your peers are investing in.

Social networking, Software as a Service, and Mobility solutions will continue to grow in importance for SMB.  However, in many cases these are part of other major business applications or they need to be in the future.

Lastly, as SMB Research is a newer research organization, we wanted to gauge the challenges that SMB’s had with getting the appropriate research for help with the key initiatives and concerns. With this question, the cost of research and the ability to get research done internally represented nearly half of the noted concerns. This was followed by availability of best practice studies and the expertise of the advisory that combined for more than one quarter of the responses.

SMB Research is happy to dig further into SMB’s interest in these areas. Please feel free to email us questions as mprescott@smbresearch.net or reastman@smbresearch.net .   What areas in SMB technology would you like us to write about?    Please contact us at   781-904-0408

Sources:

1.        Rick Whiting, Spending In 2010 Focusing On Software Maintenance And Upgrades:  ChannelWeb, February 22, 2010. ed. Forrester Research, survey of 2,200 respondents.

2.        Chaitra Vedullapalli, 5 IT Spending Spending Areas in 2010 by SMB’s, February 7, 2010  ed. IDC.  Webcast: Worlwide SMB Market Top 10 Predictions 2010, January 14, 2010

3.        Bill Chamberlin,  IDC: Worldwide SMB Market Top 10 Predictions 2010, ed. IDC.  posted January 14, 2010 webcast presenter: Raymond Bogs

4.        Steven Ostrowski, SMB’s Embracing Saas, Managed Services, CompTia, January 14, 2010, press release