Steady As She Goes For IT Spending

mall businesses remain optimistic about the near-term outlook for the economy, and this is translating into solid expectations for IT spending over the next few months.

Small-business owners’ expectations for the economy bumped up in May compared with April, according to the Small Business Optimism Index. Expectations are slightly lower than they were a year ago, but on average, small-business owners expect GDP growth over the next year to be in the 3.5 percent range, about where it is now and above the long-term trend growth rate of 3.0 percent. The Small Business Optimism Index is published monthly by the National Federation of Independent Business, a 600,000-member small-business advocacy group based in Washington.

The positive economic outlook is forming a solid foundation for spending growth. Forty-four percent of small businesses surveyed by CRN expect their technology budgets to increase over the next 12 months. This is more than double the percentage of businesses that expect their budgets to decline.

In addition, small businesses that are planning to boost spending are likely to make significant new technology investments. More than half of these companies plan to increase spending by more than 15 percent over the next 12 months.

Also, small businesses that expect to increase spending over the next year are far more committed to actually carrying out these plans than small businesses that expect to see spending decline. Seventy-two percent of businesses that expect to boost spending are either “strongly” or “extremely” committed to doing so. But only 37 percent of businesses that expect to reduce spending are strongly or extremely committed to making these cutbacks.

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While the overall near-term outlook for spending is slightly less optimistic compared with trends seen earlier this year—consistent with the slightly less optimistic outlook for the economy—opportunities still abound for solution providers, especially in hardware and software.

Small-business executives are showing increased interest in desktops and networking hardware, in particular, according to data from CRN’s Business Spending Survey.

Other CRN research data suggests that solution providers may be underestimating the strength of storage sales to the small-business market, having sharply lowered their expectations for near-term sales growth despite the relative importance small businesses place on storage.

CRN’s Business Spending Survey also shows that categories such as security (especially antivirus and firewalls), wireless, application/database development and Web services are fertile ground for the channel.