Tech Industry

Small firms spend on IT

Small business spending on network products will grow from $2.5 billion in 1997 to $4.1 billion in 2001, according to a new study.

Small business firms' information technology spending will boom over the next four years, making the market a huge growth opportunity for server manufacturers and distributors, according to a new study.

Small business spending on network products will grow from $2.5 billion in 1997 to $4.1 billion in 2001, with an expected 13.6 annual sales growth, reports market researcher International Data Corporation (IDC). IDC surveyed 500 businesses with 100 employees or less about their server spending and plans for future IT purchases in preparing its findings.

According to the report, while features like printer-sharing and email are important to small businesses, they have come to be expected. But in the near future, companies will be looking for products that offer application-sharing and productivity-enhancing workgroup functions.

Not surprisingly, manufacturing companies are expected to spend less on network tools than information and consulting firms.

According to Ray Boggs, director of small business research for IDC, the convergence of lower-priced servers with easier-to-use network software has convinced many small businesses to invest in setting up a network. "They [manufacturers] are really making the administration of the network as simple as possible," Boggs said.

Server manufacturers and distributors who either have a separate line of servers for small businesses, or have significantly tailored their servers to match small business needs are going to see the most growth in sales over the next decade, Boggs observed.

"It's not just a matter of being affordable," Boggs said. "Because a dedicated MIS [management of information services] department is rare, [smaller businesses] want high-level capabilities without exotic bells and whistles like diagnostic tools, that only a formal MIS department can really benefit from."