Study: Midmarket Not Drastically Cutting IT Budgets

Rather, most midsized businesses are redirecting IT resources to become more efficient, cut costs and improve customer relationships.

A new study commissioned by IBM Corp. of nearly 2,000 midmarket companies worldwide revealed that despite the economic slowdown, most midsized businesses have not dramatically curtailed IT spending but instead are redirecting available resources to improve efficiencies, reduce costs and prop up relationships with customers.

Findings from the study--called Inside the Midmarket: A 2009 Perspective—were compiled from web-based interviews with 1,879 companies ranging in size from 100 – 999 employees in 17 countries, including the U.S., U.K, Germany, France, China, India, Brazil, Japan, Canada, Italy, Russia, Malaysia, Australia, Mexico, Belgium, The Netherlands and Luxembourg.

Industries represented in the study included banking, retail, healthcare, consumer products, industrial products and manufacturing.

“This is an audience not just critical to IBM but also to the world’s economy,” said Ed Abrams, vice president of marketing for IBM General Business. “The midmarket makes up about $150B of the IT opportunity and will drive much of the economic recovery around the globe.”

In the study, conducted by Opinion Research Corp.--which lists the Cable News Network (CNN) as a research partner--more than half of the participants reported that the economic downturn had prompted them to increase or reprioritize their IT spending while slightly more than one-third of the participants reported decreasing their budgets.

“It’s not surprising the level at which the current economic environment is impacting decision making and spending,” Abrams said. “What’s surprising is the level of optimism and aggressive investment that a number of midsize companies indicate they still want to make. As a whole, they’re not shutting down and riding these times out. They see the opportunity to leap frog their competitors and grow when others are declining.”

Managing data highest priority

The report’s findings indicated that more than two-thirds of midmarket companies currently are planning or implementing their top IT priorities, led by infrastructure reliability, disaster recovery, information management and security management.

Information management is the highest-priority technology solution, chosen by three-fourths of survey participants. Midsized companies, when flooded with data and struggling to handle it, turn to technology—and channel partners that deliver smart solutions to solve the problem.

“The story line is not just around infrastructure and technology for technology sake,” Abrams said. “The results show midsized companies leveraging technology as a way to gain a competitive advantage, using technology as a competitive disruptor in the marketplace.”

Midmarket companies recognize the role of channel partners as trusted advisors, according to the study’s results. As a group, they value solution providers that command the expertise to help them work smarter.

“Customers in the midmarket are looking for trusted advisors, not just a partner to sell them a piece of hardware and go away,” Abrams said. “Midsized companies want to partner with solution providers that will help them solve problems.”

The study’s participants identified their top business priorities as improving efficiency and reducing costs, increasing employee productivity, upgrading customer service and pursuing new customers. More than 80 percent of midsized companies in the study said that improving efficiency, reducing costs and boosting productivity were highest on their list of business concerns.

IBM first commissioned a study of the midmarket in 2007. At that time the survey did not include the latest emerging technologies--cloud computing, green IT and social media. By contrast, this year’s study showed just how prevalent those technologies have become with midmarket companies—at least 70 percent plan to implement solutions around green IT, Web 2.0 and/or cloud computing.

“Emerging technologies are moving from the sand box to the mainstream,” Abrams said. “With green IT, the marketplace is seeing more than just the societal benefit but also the business value. Social media is clearly an emerging area of collaboration. In some business environments, people are figuring that out and learning how to leverage it as a powerful tool.”

Indeed, IBM is using some emerging technology to make the study available to its partner community. Aside from posting the report at its PartnerWorld web site, it has also been communicated to partners through IBM’s Twitter feed, LinkedIn group, Facebook and RSS feed.

TAGS: security,IBM,survey,IT budgets,midmarket

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