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Small Biz So Far Not So Crazy About the Cloud

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Many companies are slashing budgets to improve the bottom line — or at least postponing purchases until later — but not all. Thirty-nine percent of small and medium businesses reported budget cuts this year, averaging a 22 percent reduction in IT funding, according to Spiceworks’ annual survey of SMB tech departments released this morning. However, 31 percent said budgets were flat year over year, and 30 percent saw their budgets increase in 2009, averaging 27 percent. Overall, IT spending was down barely 1 percent. Spiceworks polled 1,130 IT pro’s supporting companies with fewer than 500 employees. So, whether the budgets were smaller or larger, where was all the money going?

  • Almost 37 percent of IT budgets were spent on hardware, with 24 percent going to software.
  • Desktops remained slightly more popular than notebooks, but not by much. The average SMB plans to buy 13 desktops and 10 laptops in the next year, plus two servers. Companies plan to get 50 months of use — more than four years — from their hardware purchases, up from 40 months last year.
  • Backup and recovery (38 percent), antivirus and spam prevention (46 percent) and virtualization software (30 percent) topped the list for software companies’ purchase plans this year.
  • 44 percent of SMBs are using virtualization, with companies reporting 21 percent of total computing capacity virtualized.
  • 56 percent of SMBs use at least one cloud service, with web hosting (25.4 percent), email (21.2 percent) and online backup (16 percent) being the most popular.
  • Despite all the hype regarding hosted or cloud-based solutions, 65 percent of companies surveyed prefer on-site antivirus, and 75 percent use on-site backup. Thirty-five percent use hosted antivirus, and 25 percent subscribe to hosted backup services.
  • Only 4.8 percent of total SMB storage allocation is hosted off-site with services like Amazon’s S3, but going forward, companies plan to allocate 6.6 percent of their storage to hosted services.

The economy might be throwing some industries for a loop, but SMBs are still planning to buy — though they expect to get more useful life out of their purchases. However, it doesn’t seem like full-scale cloud technologies like Amazon’s S3 and EC2 have caught on as quickly outside Silicon Valley — the majority of the companies surveyed preferred to keep things in-house rather than trust an outside company. Plus, some companies simply don’t have the computational needs that tech firms have, so cloud computing is simply not as attractive.

10 Responses to “Small Biz So Far Not So Crazy About the Cloud”

  1. I agree with Jarrod. Im not surprised with the findings as it more or less matchings with the trend I’m witnessing in the corporate world today. In fact its an interesting topic of the eternal debate – ERP v/s SaaS. Always looked at the topic from a large biz point of view but its interesting to know that the story isnt very different in the SMB space. Check out the tech debate series on

  2. Jarrod Skeggs

    The results are interesting but not surprising. I suspect that for many in the SMB market, they are operating with a bit of ignorance here. Specifically as it relates to offsite backup. Having a backup onsite is important for immediate access to restore files, but most SMB’s don’t consider the possibility that there may be need to recover form a disaster.