IT Spending: Steady in the Clouds

Let’s get the most important stuff out of the way first. 

Tiger tees off in the first round of this year’s Masters at 10:42, grouped with Australia’s Marc Leishman and England’s Tommy Fleetwood.

You can feel the Augusta Tiger buzz all over the world (okay, the golf world, anyway).

But enough golf, let’s talk IT spending.

Today’s Wall Street Journal “Morning Download” email had this headline: “IT Spending Outlook is Steady Despite Volatile Days in Tech.”

Volatile? Amazon has lost more than $50 billion of market value in the last week, Facebook somewhere north of that.

But despite that, the talk of trade tariffs and regulation, the Journal reports that “the outlook for spending on information technology appears steady.”

The estimate was based on a survey of 75 U.S. and 25 European CIOs at companies in a range of industries conducted by Morgan Stanley (and most of the firms with more than $1 billion in annual revenue.)

What’s driving the increase? First, the cloud.

The report “found that IT budgets at these firms are set to increase 5.4%, slightly up from 5.2% last year, and that “budget gains are being driven by ongoing growth in cloud computing.” It suggested that 25% of total application workloads will be running in the cloud by the end of the year (up from 20% today).

Cloud was one priority spending area, and security software was cited as another.

Fifty-nine percent indicated they “do not expect changes in tax rates, appreciated depreciation, and cash repatriation” to impact their 2018 IT spending plans, and 29% indicated the tax changes would likely put upward pressure on spending.

A Gartner forecast from earlier this year had projected estimates of IT spend to reach $3.7 trillion in 2018, a YOY increase of 4.5%.

The SMB IT Spending Zeitgeist

Click to enlarge. In Spiceworks’ “State of SMB IT 2H 2012” survey, mobile is moving on up. Tablets continue to grow in SMBs and in the last 6 months, adoption has tipped to over half (53%) of SMBs supporting tablets on their networks. The number of companies supporting tablets (53%) is on the verge of reaching the 59% of
companies who manage smartphones on their networks. Larger organizations are driving this trend towards more tablets in the workplace.

It’s that time of year.  Google has released its 2012 Zeitgeist, telling us what’s on the minds of the world’s searchers.

Facebook, not to be out done, has released the Facebook Year In Review, “a look back at the people, moments and things that created the most buzz in 2012 among the billion people around the world on Facebook.”

Now, go and ask folks what they think about Facebook’s everchanging privacy controls, and we’ll see if the Facebook Year In Review gets soon revised.

But I’m actually more interested in a big report from a small, but growing networking software and social business upstart located right here in Austin, Texas.

Spiceworks connects 2.2 million IT professionals with more than 1,300 technology brands, and offers its IT management software through a novel ad-supported model. In turn, it claims to “help businesses to discover, buy and manage $405 billion worth of technology products and services each year.”

Spiceworks just released its semi-annual “State of SMB IT Report,” a collection of statistics, trends and opinions from small and medium business technology professionals from amongst their community.

This December’s study is the seventh edition, and claims to “keep the pulse on the happenings of small and medium business IT professionals and IT departments.”

First, I’m just happy to discover they still have a pulse.

The National Federation of Independent Business’ “Small Business Optimism Index,” which is reported monthly, indicated in its November report one of the steepest declines in its history. In fact, it has reported a lower index value only seven times since it first conducted its monthly surveys in 1986.

The Index dropped a full 5.6 points in November, bottoming out at 87.5 (In 2000, by juxtaposition, it was well above 100), indicating something was rotten in November. The Index’s own Web statement suggested “it is very clear that a stunning number of [small business] owners…expect worse business conditions in six months,” and that nearly half are certain things will be worse next year than they are now, with a head nod to the looming fiscal cliff talks, the promise of higher healthcare costs, and the “endless onslaught of new regulations.”

Chicken Little, the SMB sky is falling!

Clouds, Virtualization, And Tablets Are Driving The SMB IT Spending Bus

But fear not, the SMB adoption of new technology is riding to the small business rescue, or so suggests the Spiceworks SMB IT study.

The headlines? Though IT budgets are on the rise in the SMB, hiring new staff is at a standstill. But for those still standing, in the last six months, SMBs adopted tablets and cloud services in fast-growing numbers.

Here are the four key findings:

• Tablet adoption keeps its momentum and nears smartphone levels. Hardware maintains the lion’s share of IT spend in the SMB.
• Adoption of cloud services spikes; desktop virtualization shows strong potential. (Can you say “Go long on VMWare??”)
• IT budgets reached their highest point in the last three years, while hiring freezes are up.
• BYOD is still a hot topic, though IT pros are split on the issue.

Diving down a bit, on the subject of tablets, 53 percent of SMBs now support tablets on their network, making them almost as popular as smartphones at 59 percent.

Cloud services are now used by 62 percent of SMBs, up from 48 percent in the first half of 2012.

With respect to IT budgets, they’re on the rise, averaging $162K, up from $152K in 1H 2012. But only 26 percent plan on hiring IT staff in the second half.

And on BYOD, whlie 14 percent fully embrace the trend, 32 percent say it works well for some devices, but not for others. Digging deeper, I discovered that smartphones led with 81 percent BYOD support, while tablets only garnered 62 percent.

And somewhat ironically, there’s more support for BYOD in much smaller organizations (defined here as less than 20 employees) than larger ones (50 percent in those above 250 employees).

I would encourage you to go here and register to download the full report, but the top line is this: If you’re an IT vendor looking for budget flush at the end of 2012, desktops, laptops, and servers are certainly low-hanging fruit, with tablets bringing on the most growth.

And on the software front, be on the lookout for disaster recovery and storage solutions (an IT mainstay through downturns), cloud-based solutions, and virtualization software.

Whatever you do make, just make sure you make those new purchases with “Gangnam Style” — and if you have no idea of what I’m referring to, see above with regards to the 2012 Google Zeitgeist!

Live @ IBM Smarter Commerce Global Summit Orlando: Outdoor Products Maker Husqvarna On “The Partnership Of Equals” Between Marketing And IT

One of the highlights of attending any of IBM’s events like the Smarter Commerce Global Summit in Orlando, Florida, last week is the opportunity to meet with and speak with IBM customers.

John Marchiodona, VP of marketing, and Simon Howard, head of IT for the Americas, at Husqvarna, are two prime examples.

John and Simon are the poster children for marketing and IT coming together to create new capabilities and opportunities for their customers, in their case for a 300+ year-old commercial concern that now focuses on outdoor products, including chainsaws, lawnmowers, and the like.

John and Simon explained in the interview Scott and I conducted with them how new digital opportunities, particularly in the social space, have required them to come together earlier and more often to map out new requirements and capabilities for better serving their clients.

As they explained, “Technology is becoming more and more a requirement for everybody,” and a good example of the fruits of their labor was a new social media section of the Husqvarna site that contained videos demonstrating the safe and productive use of their products.

As they explained in our discussion, theirs’ (marketing and IT) is a “partnership of equals,” and that to fulfill on the new digital demands of their consumers, “they have to have the necessary platforms in place to do what they want to do.”

IT Budgets, Rex Ryan, and Vegas Sports Books

Okay, I went back and checked my NFL playoff picks for the weekend (see my last post).

Three out of four ain’t bad, and who would have thunk the New York Jets were going to beat the New England Patriots, especially after the season Tom Brady has had.

But kudos to Mark Sanchez, Rex Ryan, and the entire Jets organization — that was a helluva win and in Foxborough no less (New England’s home turf).

After watching “60 Minutes” last night and the story on sports betting guru Billy Walters, however, I don’t think I’m quite ready to start making book at $200K+ a game!

As to spending on IT in the small- and medium-sized business market, IBM just completed a global study of more than 2,000 midsize companies representing more than 20 countries.

The verdict? More than half of midsize companies are planning to increase their IT budgets over the next 12 to 18 months.

The study, entitled “Inside the Midmarket: A 2011 Perspective,” found that 70% of midsize companies were actively pursuing analytics technology to better understand their customers, make better decisions, and become more efficient.

No shocker, 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.

Midsize firms are balancing their IT spending across cost reduction and efficiency, customers, innovation, and growth.

A few other choice tidbits:

• Security (63%), customer relationship management (62%) and analytics / information management (59%) were cited as their “Most Critical IT Priorities.”
• 75% plan to upgrade their core IT systems to improve performance, security and reliability.
• Top expected benefits from cloud computing include cost reduction, better manageability of IT, improved system redundancy and availability.
• Top barriers to IT adoption cited were cost, difficulty in acquiring and deploying technology solutions, and lack of IT skills and resources.

These observations suggest a far cry from a similar survey from nearly two years back, when the conversation was dominated by cost-cutting and efficiencies, rather than business expansion and gaining greater insight.

Observed Andy Monshaw, general manager of the IBM Midmarket group, “The survey findings show that midsize firms are tackling a new set of opportunities to advance their role as engines of economic growth.”

Visit here to download the full study and learn more.