Small businesses spend big on infrastructure

Small businesses spend almost two thirds of their IT budgets on infrastructure says Gartner. In contrast, the figure for larger organisations is just under half.

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By  Simon Duddy Published  August 2, 2005

Small businesses spend almost two thirds of their IT budgets on infrastructure says Gartner. In contrast, the figure for larger organisations is just under half. Gartner Consulting's Worldwide IT Benchmark Group says small and midsized businesses spend up to 60% of their IT budgets on infrastructure. Gartner classes small and midsized organisations as those with under US$1 billion in revenue. Its infrastructure classification includes data centre, voice and data networks, desktop and help desk spending. For organisations with over US$1 billion in revenue, the average spend on IT infrastructure is just under 50%. “For many small and medium sized businesses, particularly those that compete in highly competitive marketplaces, IT can be a key component of competitive strategy,” says Howard Rubin, an associate with Gartner Consulting. “However, in more mature markets, some small organisations still treat IT as just another cost of doing business. Those organisations continue to focus on keeping IT costs down,” he adds. For companies with less than US$1 billion in revenue, media companies and IT firms were among the leaders in terms of IT spending as a percentage of revenue in the 2005 rankings, at 8.16% and 6.85%, respectively. Banking and financial services organisations typically spend at the highest rates, but they ranked sixth and fourth, respectively in the 2005 results. Energy and consumer products organisations were among the lowest spenders on average.

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