Downturn in U.S. Economy Has Significant Impact on SMB Priorities and IT Spending Plans, IDC Reveals

FRAMINGHAM, MA. – DECEMBER 8, 2008- The downturn in the U.S. economy is having a significant impact on small and medium business (SMB) priorities and plans for technology acquisition. The concern is real, and impact potentially profound, with variations by company size, industry, and attitude segment, according to a recent IDC survey. As a result, 38% of small firms are more likely to delay IT spending, and 42% of medium-sized businesses are more likely to reduce IT spending.

"The majority of SMBs are extremely or strongly concerned about the current and expected state of the U.S. economy over the next 12 to 18 months," said Justin Jaffe, senior research analyst for SMB programs at IDC. "Although SMBs are expected to drive greater growth in IT spending than the corporate IT market overall, it will be critical for vendors to understand how changing economic conditions will impact the spending habits of companies of certain sizes, vertical industries, and attitudinal characteristics."

Among other key findings are the following:

* Businesses in the architecture/engineering, legal, retail, and manufacturing sectors are the most likely to delay IT spending, and wholesale, insurance, and legal firms are the most likely to reduce IT spending.

* Small and medium-sized businesses are more likely to focus IT investment on tactical projects, which deliver immediate benefits, than strategic projects.

* Cloud computing initiatives are not being driven by economic concerns, save for the small minority of SMBs that indicate that they will look more closely at hosted solutions as a result of the economy.

* Fewer than 50% of SMB 2.0 firms, the most forward-looking group, are extremely or strongly concerned about the U.S. economy, compared with approximately 70% of IT Indifferent firms and 60% of Pragmatist firms.

IDC's study, Impact of the Changing Economy on SMB IT Spending: Who is Being Affected and How? (Doc # 215317), presents the results of IDC’s survey and analysis of the attitudes of small businesses (fewer than 100 employees) and medium-sized businesses (100-999 employees) toward the current and expected state of the United States economy over the next 12 to 18 months.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 100 countries. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

All product and company names may be trademarks or registered trademarks of their respective holders.