Midsize firms easing through economic downturn

A new survey shows that midsize firms are taking better advantage of technology to stay competitive in the challenging economic environment.

A recently released report from IBM (PDF) shows that midsize businesses (100-1,000 employees) are taking advantage of technology better than both their larger and smaller peers to grow during lean economic times.

According to the report, as economies around the world continue their recovery, midsize companies have been the engines driving economic growth--reacting to a "new normal" in terms of spending and growth.

In previous periods of global economic difficulty midsize companies have struggled, often because they have had less capital available to invest in new products and also because big businesses have tended to exploit their dominant position, pushing midsize firms to compete on an uneven playing field.

And yet, the report shows it's the midsize companies that appear to have figured out how to weather the storm and take advantage of technology to grow during the downturn.

While more than three-quarters of respondents said cost-reduction and improved efficiency were their top priorities, nearly two-thirds said improving insights for better decision making was a top priority.

2011 critical business priorities
2011 critical business priorities IBM

  • More than half are planning to increase their IT budgets over the next 12 months, versus only 20 percent in 2009,
  • 70 percent are planning or currently implementing a business analytics solution,
  • 66 percent of midsize companies surveyed have cloud computing projects in progress or in the planning stage (some 76 percent are either currently using or planning to use a private cloud approach), and
  • more than 70 percent of midsize firms are seeking a consultative, versus purely transactional, relationship with their primary IT provider.

In terms of technology specifics, survey respondents listed IT infrastructure improvement as their topmost project, with collaboration, business intelligence (BI), and business process management (BPM) all following closely behind. As a corollary to the importance of both increasing efficiency and improving infrastructure, respondents said the top two benefits of cloud computing were cost reduction and the manageability of compute costs in a cloud environment.

Overall, respondents noted that cost was the No. 1 barrier to addressing their IT priorities. This, of course, comes as no surprise, but it helps make the case for open-source and cloud-based solutions, which tend to have lower initial implementation costs.

 

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