Midsize businesses to increase IT budgets; Priorities include cloud computing and analytics

By SMBWorld Asia Editors | Jan 26, 2011

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More than half of midsize companies are planning to increase their information technology (IT) budgets over the next 12 to 18 months, according to an IBM global study of more than 2,000 midsize companies representing more than 20 countries. As a result, these companies are investing in a wide range of priorities including analytics, cloud computing, collaboration, mobility and customer relationship solutions.

"Inside the Midmarket: A 2011 Perspective," commissioned by IBM and conducted independently by KS&R, Inc, found 70% of midsize companies are actively pursuing analytics technology to better understand their customers, make better decisions and become more efficient. The study also shows growing adoption of cloud computing among midsize firms, with two-thirds either planning or currently deploying cloud-based technologies to improve IT systems management while lowering costs.

Other key findings include:

o 53% of respondents expect their IT budgets to increase over the next 12 to 18 months, 31% expect they will remain unchanged and 16% think they will decrease or are unsure.
o Security (63%), customer relationship management (62%) and analytics / information management (59%) were cited as their "Most Critical IT Priorities."
o 75% plan to upgrade their core IT systems to improve performance, security and reliability.
o Top expected benefits from cloud computing include cost reduction, better manageability of IT, improved system redundancy and availability.
o To achieve their technology objectives, more than 70% plan to pursue a consultative (IT and business), versus purely transactional relationship with their primary IT provider.
o Top barriers to IT adoption cited were cost, difficulty in acquiring and deploying technology solutions, and lack of IT skills and resources.

"The study shows that midsize companies are tackling a new set of opportunities to advance their role as engines of economic growth. When we spoke to midsize firms 18 months ago, most were focused on reducing costs and improving efficiencies. Today, the conversation is also about expanding their business, connecting with customers and gaining greater insights," said Ireen Catane, Country Manager for General Business, IBM Philippines.

The IBM survey findings are consistent with IDC’s Philippine Small and Medium-Sized Enterprise IT Buying Behavior and Adoption Plans 2010 report, which states that with economic prospects and business expectations looking up, most SMEs are now more than ever looking at IT as an essential tool to achieve longer-term business growth. Whether in the form of social media technology adoption as a means to push their products and services, building more dynamic Web sites, reengineering back-office functions to become automated, or improving after-sales support through a sound IT and telephony system, SMEs are expected to put a lot of effort toward IT capacity building for longer-term strategic growth.

Comparisons between the current study and those from 2009 also reveal a shift from a predominant focus on cost control and efficiency to a greater emphasis on growth initiatives. Today, 21% characterize their strategic mindset as 'efficiency and cost control', with the majority (79%) concentrating on customers, growth and innovation. In 2009, 53% characterized their company mindset as one of efficiency and cost control", with less than half (47%) focused on growth, innovation and customers. This change is reflected in the increased adoption of analytics and predictive technologies that have become more affordable and widely available for midsize companies.