SpiceWorld 2017: Small Businesses Prove Cautious Innovators as IT Budgets Jump

Looking ahead to next year, more companies than this year expect to increase their IT budgets, according to an annual survey released by Spiceworks, the online community for IT professionals. However, small businesses are less likely to invest in both IT staff and newer technologies than their larger enterprise counterparts, the survey notes, reflecting the fact that they tend to have fewer resources to spread around in general.

Spiceworks released its “2018 State of IT” report at the SpiceWorld 2017 conference in Austin, Texas. It reflects a snapshot of how the Spiceworks community expects the next year to proceed in terms of IT investments. Fully 63 percent of the survey respondents came from companies with fewer than 500 employees.

While businesses of all sizes expect to increase investments in cloud technology in the year ahead, the survey reveals that smaller firms are more cautious about some emerging technologies, including artificial intelligence, virtual reality, the Internet of Things (IoT) and IT automation.

The survey was conducted by Spiceworks in July 2017 and included 1,003 respondents from North America and Europe, Spiceworks notes in a statement. Respondents are among the millions of IT professionals in the Spiceworks community and represent a variety of company sizes, including small and medium-sized businesses (SMBs) as well as enterprises. Respondents come from a variety of industries including manufacturing, healthcare, nonprofits, education, government and finance. 

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Enterprises See Sharper IT Increases than SMBs

In 2018, 44 percent of all companies surveyed expect their IT budgets to increase while 43 percent expect budgets to remain flat. Only 11 percent of companies expect IT budgets to decrease.

In last year’s survey, most companies expected their IT budgets to be flat. Peter Tsai, senior technology analyst at Spiceworks, says that the economy is improving and companies are more confident about investing compared to a year ago.

The survey found that 44 percent of small companies (with between one and 99 employees) expect their IT budgets to increase next year, but that figure dropped to 36 percent for medium-sized companies (with between 100 and 499 employees). It shot up again for larger firms, as 52 percent of companies with between 500 and 999 employees expect to see IT budgets increase, and 51 percent of those with between 1,000 and 4,999 employees expect to see the same.

As budgets stabilize, 45 percent of companies plan to hire more IT staff to manage new hardware, software and services. Larger companies are expecting the biggest increase in IT staff, as 62 percent of enterprises with 1,000 to 4,999 employees and 70 percent of companies with more than 5,000 employees report they’ll hire more IT professionals in 2018.

However, only 32 percent of small companies and 37 percent of medium-sized companies expect to increase IT staff, the survey found.

Tsai says that companies with small IT teams often do not have the resources to increase their IT staff levels. If a company has just one IT staff member, “to double your staff is a bigger jump than to go from three dozen people and hire five extra people. That’s less of a proportional jump. And they do have more resources where they can scale up and scale down.”

Smaller Firms More Cautious About Emerging Tech

When examining the adoption of the latest technology trends, the survey results show emerging technologies, such as IoT, virtual reality and AI, are becoming more prevalent in the workplace.

Currently, 29 percent of all organizations surveyed have adopted IoT while 18 percent have adopted VR and 13 percent have adopted AI technology. In the next 12 months, the adoption of emerging technologies is expected to increase significantly for IoT (48 percent), VR (32 percent) and AI (30 percent).

At small companies, however, only 20 percent have adopted IoT (17 percent plan to do so in the next 12 months), 9 percent have adopted VR (7 percent plan to) and just 4 percent have adopted AI (9 percent plan to).

In general, companies are adopting these technologies to get an edge on the competition and increase revenue or become more efficient, Tsai says. Smaller firms generally have fewer resources to spend and are more cautious than enterprises. Enterprises tend to lead technology adoption while smaller firms wait to see how the IT is being used and deployed before adopting it themselves. That was the case with earlier technologies like virtualization, Tsai notes.

One area where all businesses are investing is cloud technology. Among the categories of hardware, software, cloud and managed services, the highest percentage of businesses (55 percent) reported an increase in cloud budgets in the past year, especially enterprises. Indeed, 66 percent of companies with 1,000 to 4,999 employees and 72 percent of those with more than 5,000 employees report an increase in hosted/cloud budgets.

A few of the most common workloads supported by cloud infrastructure include communication and collaboration (42 percent), backup and disaster recovery (41 percent) and productivity apps (29 percent).

Small businesses are more likely to use cloud for communication and collaboration, the report notes. Larger companies (more than 1,000 employees) report greater usage of cloud-based infrastructure to support software development, electronic commerce, and research and development or other engineering purposes.