Small Businesses Primed For Tech Refreshes

Over the next year, half of companies with fewer than 100 employees plan to hike their technology budgets, and 72 percent expect double-digit spending increases, according to a CRN survey of 200 small-business IT executives last month. What's more, 65 percent of businesses that plan to raise spending say they're "extremely" or "strongly" committed to making those increases.

Tech categories where small companies show an increased spending priority include wireless, supply chain management, CRM, desktops, peripherals and storage, CRN research found. Notebooks also continue to exhibit strong sales, and areas such as networking hardware, antivirus, firewalls and convergence stand to see rising sales activity.

The strength in small-business IT spending stems, in part, from the technology refresh cycle and a continued upbeat view of the economy, solution providers say. "We are seeing more people who are ready to buy," said James Huang, product marketing manager at Amax Information Technology, Fremont, Calif. "We do sense that this is picking up. We're getting more orders from small and medium businesses."

Huang said that at two trade shows this month, businesses actually solicited his company's services, whereas at past events--such as the 2003 LinuxWorld Expo--small-business owners and executives sought product and pricing information but didn't follow through. "This year, we're seeing a lot more serious interest," he said. "I've never seen this. I had people [at trade shows] on the spot asking for quotes, with specific requirements."

id
unit-1659132512259
type
Sponsored post

Though agreeing that small-business IT spending is on the upswing, some VARs noted that the opportunities may be fragmented. "Sometimes, a company will need to change all of its desktop systems all of a sudden," said Casey Ho, president of USA Systems, a Walnut, Calif.-based solution provider and system builder. "Maybe I'll have 50 computers I'll need to build, all of a sudden. That happens all the time. But if it doesn't happen, I'm not relying on it. I'm still OK."

Ho said small companies are grappling with many of the same technology issues as large enterprises, particularly the inevitability of system upgrades. "They have software issues, too," he added. "The applications they have on their equipment, they eventually have to upgrade."

Pritt Gill, president of Mega Micro Devices, a Fremont, Calif.-based solution provider, said revenue driven by small-business customers has come from similar headroom issues. "They always need the more current processor, more and more memory, a faster hard drive, a bigger hard drive," he said. "As we go along, programs are becoming bigger and bigger."

That, combined with some industry analysts's forecasts for a brightening overall economy, points to gains in the small-business segment, according to Gill. "With the overall economic picture, it adds up to, yes, [IT spending] will increase," he said. Activity in the small-business arena likely will pick up toward the latter part of the year, triggered by the back-to-school spending season, Gill added.

Amax's Huang said he sees opportunities in more new areas for his company than ever before. "We're probably going to expand our IT sales force," he said. "We're encouraging our [sales] people to start venturing into more high-end servers and desktop systems. There is a market out there."

Other key findings in the August CRN Monthly Technology Spending Outlook include the following:

• Optimism for overall IT spending stretched across virtually all market segments, including enterprises, midsize businesses and government accounts.

• The Unix/RISC server space drew the least amount of optimism among VARs for near-term sales prospects, as the CRN solution provider sales expectations index for that category was down nearly half from just a month earlier. However, monthly figures in this space are notoriously volatile.

• Newer technologies represent most of the top 10 categories where solution providers have their highest near-term sales expectations.

• Asked to rate their level of satisfaction with key IT vendors's channel programs over the past six months, VARs gave the highest marks to Intel, Microsoft and Advanced Micro Devices, while 3Com, Citrix Systems and Lexmark received the lowest ratings during that time.

*FOR THE EXPANDED CRN MONTHLY TECHNOLOGY SPENDING OUTLOOK, CLICK HERE.