Bare Cupboard for IT

Small businesses tightening pursestrings

Data from an exclusive bi-monthly survey of 200 small business MIS executives by CRN, a trade newsweekly that provides industry news and analysis for solution providers, integrators and e-businesses show that technology spending is becoming less of a priority for these companies as the first quarter progresses. The trend is across the board, extending to the Internet and e-commerce areas as well as hardware and software. The most recent version of CRN's survey, conducted in January, indicates that IT spending by small businesses will remain constrained, at least into the second quarter of this year.

As part of the survey, CRN asks small business executives to characterize the degree of priority they attach to IT spending in 25 Internet and hardware/software categories in the three months following the survey date. In the January 2001 survey, the degree of priority declined, in some cases sharply, in nearly all of these categories compared to the November 2000 version of the same survey. This was true even in networking installation and upgrading, as well as desktop PCs; three areas that have been among the top spending priorities for these companies.

The downward trend in the degree of priority was first seen in the November 2000 survey; the January results represent an acceleration of that trend. "The data does not bode well for small business IT spending for the rest of this quarter and well into the second quarter," says John Roberts, CRN's director of editorial research. "In turn, this will have a negative impact on overall business IT spending because small companies have been a driving force behind spending growth in the past several years."

The January 2001 survey data also show that factors such as budget considerations and general economic/business conditions are two key reasons behind the increased pessimism by small businesses toward technology spending. More specific factors, such as systems upgrading, are also having less of a less of a positive influence on small business spending plans.