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Study: Small firms' IT spending to grow

An NPD study says spending will rise 13 percent over 2004, driven largely by services.

CNET News staff
Technology spending by small and medium-size businesses will grow by 13 percent this year, but the projected growth rate is lower than that in 2004, a market study has shown.

Small firms, defined as those with five to 99 employees, will increase their spending by 11 percent. Mid-size companies, with as many as 1,000 workers, will set aside 15 percent more in 2005 for IT expenses, according to a new report from NPD Group. Small and medium-size businesses spent, respectively, 20 and 25 percent more on IT in 2004 than in 2003.

Among different categories, services will see the most growth in 2005, an increase of 25 percent as compared to 20 percent in 2004. Small companies alone plan to increase services expenditures by 47 percent--about 3 percent more than in 2004.

Hardware spending, particularly on desktops and notebooks, by small firms will go up by 30 percent in 2005--almost double the growth scored last year.

The report, result of an online survey of randomly picked 1,000 IT professionals, also indicated that the companies would be insistent on quality of service and support while choosing a reseller. "This has important implications for the manufacturers, distributors, and resellers in the sense that a holistic channel strategy is necessary to be successful in the SMB space," said Stephen Baker, NPD's director for industry analysis, in a statement.