53% Midsize Businesses Plan To Increase IT Spend

IBM study finds midmarket companies are shifting their primary focus from cost cutting to infrastructure investments, the cloud, and business analytics in 2011.



Top 10 SMB Predictions for 2011
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Slideshow: Top 10 SMB Predictions For 2011

53% of midsize businesses plan to spend more on IT in 2011, according to a study released Friday by IBM.

Perhaps even more indicative of brighter days ahead: Just 21% of firms cited operational efficiency and cost reductions as their "top strategic mindset" for IT, a 32-point drop from IBM's previous midmarket survey one year ago.

That's not to say that costs are no longer a concern: 76% listed it as a "critical business priority," making it the one most commonly cited by businesses. But costs are not necessarily the dominant driver of IT budgets for 2011.

Customer focus was the primary mindset for technology spending in this year's report, with 31% of respondents listing it as most important, a jump of 20 points compared with the 2010 version of IBM's study. Revenue growth -- rarely a bad pair of words in the business world -- was a close second, with 30% listing it as the primary strategic goal for IT budgets. Innovation ranked fourth (out of four choices) with 18%

"It's clear to us that we're seeing a shift now in people looking forward and growing their business, and leveraging technology to do that, rather than just looking for cost controls," said Ric Telford, vice president of cloud services for IBM.

"Inside the Midmarket: A 2011 Perspective" was commissioned by IBM and conducted by an independent firm. It included 2,112 businesses -- all with between 100 and 1,000 employees -- across the globe and a variety of industries.

So where are those swelling budgets going? Among the study's "top IT project implementations worldwide," which measured projects in progress (but not yet completed) and those planned for the year ahead, the leading category was infrastructure improvements: Three out of four respondents have an upgrade underway or something in the works.

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Telford called attention to two areas of particular interest to him and to IBM going forward: Cloud computing and business analytics. 70% of midsize firms have started a business analytics / intelligence implementation or will soon. Two out of three companies have kicked off a cloud project or are on the road to one.

With definitions of the cloud still hazy to some, it merits mention that cloud computing, software as a service, and virtualization were listed as separate project types in the survey. The response rates of ongoing or imminent IT plans for the three categories were notably similar: 66%, 65%, and 67%, respectively.

Whether its infrastructure or applications, Telford said that the decision to move certain technology needs off-site can be a function of the number of people required to manage it internally relative to company size.

"One of the things we do is we look at cloud adoption by workload, because we believe different workloads are perfect for cloud, others it may be a while," Telford said, pointing to collaboration and data backup as two areas where midsize businesses tend to drive cloud adoption. "Midmarket companies, the more people they hire for IT, the fewer people they can hire to do whatever their business is, whatever their industry is."

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