Small Business Plans Big IT Spending

The October CRN Business Spending Survey, which questioned about 200 small-business IT executives, found that almost half plan to increase their technology budgets into early 2005, with a significant portion by double-digit percentages.

"There is a product refresh and some expansion as well," said Norman Flamm, president of Micro Air Computers, a Reading, Pa.-based system builder and solution provider. "They are bringing on new personnel that they need equipment for."

Other solution providers and system builders, many of which do a significant portion of their sales with small businesses, said they were struggling to keep up with a noticeable jump in sales that began in the third quarter.

According to CRN research, of those small-business executives questioned in October, 47 percent said they were planning spending hikes through the next year. Of those, 36 percent plan to increase spending by more than 20 percent. Another 35 percent of those surveyed said they plan to increase their IT spending next year by 11 percent or more.

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The strength of spending plans among small businesses also comes as some key vendors have begun realigning their 2005 strategies. For example, Intel, Santa Clara, Calif., has already begun an initiative to increase incentives in its system builder channel to put more focus on selling into the small-business space.

In a recent interview, Intel President Paul Otellini, who is slated to become CEO next year, said small businesses would continue to be a significant focus for Intel and its channel in 2005. "This year's focus on small businesses—helping small businesses get more productive through the application of digital technology—has been successful," Otellini said. "We want to expand it next year, expand it more globally."

The bet on small businesses, according to CRN research, appears to be a good one. Of those businesses planning to increase spending next year, 79 percent are either "extremely committed" or "strongly committed" to those spending plans, the October survey found.