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SMB IT budgets up

SMB IT budgets up
By Graeme Philipson, Special to ZDNet Asia
URL: http://www.zdnetasia.com/smb/specialreports/0,39045280,39362041,00.htm

IT budgets of small and medium-sized businesses in Singapore are more likely to increase than decrease.

More than one-third (36.5 per cent) of Singapore SMBs polled in the ZDNet Asia SMB IT Priorities 2006/07 survey increased their IT budgets this year, twice as many as those who saw a decrease. 

Next year the proportion expecting an increase in their IT budgets will jump to more than half (50.6 per cent) of all respondents, compared to only 7.1 per cent who expect a decrease. Many more people are predicting their security budget will go up next year (more than half of all respondents) compared to those who predict it will go down (only 6 per cent).

The results of the survey, which was conducted online between March and April 2006, indicate an SMB base with a diverse range of priorities. On the whole they are optimistic, with budget increases and a significant expansion of their IT operations.

Security is a significant concern, and many initiatives are based on protecting what they have rather than growing their capabilities, but on balance the results show an industry sector that is vibrant and forward-thinking.

The survey drew 134 respondents, of which 63 percent were from Singapore across all industry sectors. Each organization could mention up to three priorities. A total of 197 priorities were mentioned in all, an average of 2.3 per respondent. The survey also asked questions about IT security threats, key technologies over the next few years, the desired attributes in an IT supplier, as well as IT outsourcing and budgets.

Respondents came from a range of industry sectors. About one quarter were from the IT industry, with strong representations from retail and wholesale, business services and manufacturing. Respondents represented many sizes of organization. One quarter had fewer than 20 employees, and around half fewer than 100. Nearly 20 per cent were larger, with 500 or more employees.

Responses were coded and grouped into types. The most important IT priorities were:

  • Security (11.7 per cent of initiatives). Many respondents said simply "security", with other responses being both very general and very specific, from data encryption of user PCs to network-wide virus protection.
  • Data storage (11.2 per cent). Around half had to do with backup and disaster recovery (which may also be regarded as a security issue), and others were to do with storage consolidation or expansion.
  • Infrastructure upgrades (9.1 per cent). This comprised a diverse group, including hardware and software upgrades, moving to new platforms, the implementation of new architectures, and expansion into new geographies.
  • Applications software (7.6 per cent). Note that ERP is coded separately (see below). If it had been included with this group, it would have made the largest initiative type. These initiatives included accounting software, HR systems, inventory management, and industry-specific applications.
  • Improving business processes (7.1 per cent). This included a couple of mentions of outsourcing, and initiatives as diverse as crisis management and cost containment.
  • Hardware upgrades (5.6 per cent), including server virtualization and consolidation.
  • ERP (enterprise resource planning) systems (5.1 per cent) comprising upgrades and those installing these systems for the first time. See the above comments on applications software--had these been coded together they would have formed the largest group of initiatives.
  • E-mail and groupware (4.6 per cent), including workflow and spam management.
  • Content and document management (4.6 per cent), including knowledge management and related issues.
  • Wireless and mobility (4.1 per cent), including remote access and management.

Respondents were also asked about the extent of current and planned usage of various technologies over the next three years. High bandwidth internet and Web services were the most popular, followed by VoIP (voice over Internet Protocol), tablet PCs and mobile Internet on 3G were the least popular.

About one-half of the respondents have no ERP system, but half of these (one quarter of the total) are planning to install the business application in the next three years. 

The most commonly expressed attribute in an IT supplier is that they should have quality products. This is more important than price and after-sales service, then came the ability to offer value-added services, knowledge of the customer's business, and financial stability. Respondents do not care so much about the supplier's staff turnover, whether it is certified or not, or the breadth of its products.

Graeme Philipson is an independent IT writer and analyst. He was commissioned by ZDNet Asia to compile and analyze the results of ZDNet Asia SMB IT Priorities 2006/07 Survey.

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