BOSTON – The downturn in the U.S. economy is having a significant impact on small and medium business priorities and plans for technology acquisition, according to research firm IDC Corp.

The concern is real, and impact potentially profound, with variations by company size, industry, and attitude segment, according to a recent IDC survey. As a result, 38 percent of small firms are more likely to delay IT spending, and 42 percent 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 Framingham, Mass.-based 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.”

For the channel, at this moment the emphasis is on real, near-term business benefits. Messaging that doesn’t focus on solving immediate business problems will not resonate with firms that are fighting to survive to make the next payroll. “Solution providers that can tell a compelling and instant ROI story will be the ones who come out on top,” he remarked.

Among other key findings:

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.

SMBs are more likely to focus IT investment on tactical projects, which deliver immediate benefits, rather than strategic projects.

“Most SMBs, and particularly smaller firms, are perennially cash-strapped, and most will not be buying any IT product or service that they don’t absolutely need in the near-term,” Jaffe continued. “That said, delaying purchases may not always be possible: when the PC in the accounting department breaks, there’s really nothing else to do but go out and buy a new PC. The vendors that can offer favorable financing terms will have a significant competitive advantage.”

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 percent of SMB 2.0 firms, the most forward-looking group, are extremely or strongly concerned about the U.S. economy, compared with approximately 70 percent of IT indifferent firms and 60 percent of pragmatist firms.

“Our research indicates that they (SMB 2.0 firms) are the least likely to be troubled by the challenges of the changing economy,” he said.

The study, Impact of the Changing Economy on SMB IT Spending: Who is Being Affected and How?, presents the results of IDC’s survey and analysis of the attitudes of small businesses (fewer than 100 employees) and medium-sized businesses (100-999 employees) toward the current and expected state of the U.S. economy.

“SMBs are such a highly diverse group, that there’s really no one-size-fits-all method that they are adopting to confront the economic situation,” Jaffe added. “Our research shows that small firms are more likely to delay IT spending, while medium-sized firms are more likely to reduce IT spending during the next 12 to 18 months.”

This column was written by Liam Lahey of ConnectIT, an IntegratedMarCompany

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