Economy slows tech spending: Who’s most affected?
December 8, 2008 by Valerie HelmbreckPosted in: Budgets and spending, Communication, Special Report
Hoping that IT would be immune from spending cuts in this lousy economy? Think again. It looks like critical IT services are going to be feeling the pinch soon enough.
IT researchers at IDC, a leading industry analyst, say the downturn in the U.S. economy is having a significant impact on small and medium business (SMB) priorities and plans for technology acquisition.
The concern is real, and the impact potentially profound, say IDC analysts, with variations by company size, industry, and attitude segment. A recent IDC survey showed that, as a result, 38% of small firms are more likely to delay IT spending, and 42% of medium-sized businesses are more likely to reduce IT spending.
“The majority of SMBs are extremely or strongly concerned about the current and expected state of the U.S. economy over the next 12 to 18 months,” said Justin Jaffe, senior research analyst for SMB programs at IDC. “Although SMBs are expected to drive greater growth in IT spending than the corporate IT market overall, it will be critical for vendors to understand how changing economic conditions will impact the spending habits of companies of certain sizes, vertical industries, and attitudinal characteristics.”
Among other key findings are the following:
- Businesses in the architecture/engineering, legal, retail, and manufacturing sectors are the most likely to delay IT spending, and wholesale, insurance, and legal firms are the most likely to reduce IT spending.
- Small and medium-sized businesses are more likely to focus IT investment on tactical projects, which deliver immediate benefits, than strategic projects.
- Cloud computing initiatives are not being driven by economic concerns, save for the small minority of SMBs that indicate that they will look more closely at hosted solutions as a result of the economy.
- Fewer than 50% of SMB 2.0 firms, the most forward-looking group, are extremely or strongly concerned about the U.S. economy, compared with approximately 70% of IT “Indifferent” firms and 60% of “Pragmatist” firms.
What are your plans for the coming months? Will you put off projects or purchases for the moment, or scuttle them altogether?
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December 9th, 2008 at 10:45 am
Our healthcare facility has become almost entirely paperless through our current and continuing increase in information technology. Very costly training occurred for months which increased our ability to bill quickly; resulting in better A/R days. We have made the decision to delay the purchase of a $27,000.00 bar code scanner due to available cash. Our facility willl be adhering to department budgets, IT along will all departments will be cutting back on purchases; only ordering what is necessary; cutting back on overtime and creatively figuring out ways to cut costs.
December 9th, 2008 at 11:42 am
We have put off an Office 2007 upgrade for another year due to the need to cut expenses for the year. We’re going to have to make due with Office 2003 and the 2007 converter.
December 9th, 2008 at 3:16 pm
In your sentence: “Businesses in the architecture/engineering, legal, retail, and manufacturing sectors are the most likely to delay IT spending, and wholesale, insurance, and legal firms are the most likely to reduce IT spending.” You mention “legal” twice as delaying spending and also as reducing spending. Are they doing both (reducing current spending and also delaying some spending) or is this a typo?
December 9th, 2008 at 3:24 pm
Good question Keith. The answer is both; they’re cited among those most likely to both delay and reduce spending. Thanks for asking!
December 16th, 2008 at 3:30 pm
@Tanya: Have you your compay tried using open source software to reduce cost? Instead of using Office 2007, why not try Openoffice 3.0 and see it can meet your needs.