Top 5 Tech Segments SMBs Will Spend Money On

Ask any group of solution providers for one word to describe their small-business customers and there's a good chance their collective response will sound like a brood of chattering chicks: "cheap, cheap, cheap."

After all, solution providers say, every dollar spent on IT equipment is hard-fought and needs to show an almost immediate return.

"Small-business owners are tighter than a ... well, I'm not going to finish that. It was something I learned in the Navy," laughed Art Torres, owner of Post Computer Systems, a Wilbraham, Mass.-based solution provider, when talking about the challenges selling into that market. "I'll just say budgets are tight, and IT is less considered in the overall budget."

But the situation is improving, according to the CMP Channel Quarterly Business Spending Survey. A majority of small businesses surveyed are planning to increase IT expenditures over the next 12 months, and about 60 percent of those increasing their IT budgets will do so by more than 10 percent. Fifty-six percent of these SMB IT decision-makers expect to spend more on IT solutions in the next year, while 38 percent said they expect to spend about the same amount of money. Only 6 percent said they plan to decrease IT spending for the same period.

Also, 62 percent of small businesses polled strongly agreed with the statement "technology is something that can create a genuine competitive advantage for my company." That's incentive for solution providers to show their small-business customers how technology translates to a competitive advantage, several resellers said.

Among the group of respondents that said they expect IT spending to increase, 28.1 percent said they expected spending to increase 6 percent to 10 percent, which is in line with many analysts' projections for the overall market. However, 27.2 percent of respondents expect their IT spending to increase by more than 20 percent. In contrast, only 13.2 percent expect IT spending to increase from 1 percent to 5 percent.

Those who plan to increase spending expect to spend an average of $13,000 on IT equipment over the next year.

The respondents highlighted five technology categories where they have sought or received help the most from solution providers: network security, archiving and backup, client and desktop security, network infrastructure, and accounting and supply-chain applications (see "Upsell Opportunities," page 38). These five areas now present key opportunities for upselling in the SMB market.

Next: Network Security