SMBs will spend, but more planning required

IT spending in the region is set to receive a big boost from the SMB sector over the coming year, however improvements in purchase planning are required if such firms are to really benefit the most from any technology they buy. That’s the prediction of HP Middle East, which announced the results of its latest SMB study at Gitex yesterday.

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By  Matthew Wade Published  September 26, 2005

IT spending in the region is set to receive a big boost from the SMB sector over the coming year, however improvements in purchase planning are required if such firms are to really benefit the most from any technology they buy. That’s the prediction of HP Middle East, which announced the results of its latest SMB study at Gitex yesterday. The company commissioned an independent research firm to poll 265 organisations in Saudi Arabia, Kuwait and the UAE, each of which has between one and 500 employees (a.k.a. small to medium size businesses), and found that a huge 70% of respondents expected to increase their spending on IT within the next 12 months. Of this likely spending, Middle East SMBs look set to spend the most on enhancing and improving their basic IT infrastructure (74% of respondents claimed as much). This predicted requirement was followed by them buying new packaged software (57%), data communication services and equipment (28%) and external IT services (with 17%). However, in addition to uncovering these likely purchasing trends, HP’s study also highlighted another significant theme. That is - although 76% of respondents claim to consider return on investment (ROI) when undertaking technology purchases, less than one third of these firms (just 22%) actively work out the total cost of ownership (TCO) of a technology investment prior to purchase. In fact, just 6% of respondents overall have a systematic means of measuring the TCO of a technology investment. This lack of research and ROI/TCO planning is a worrying issue, according to HP, and one its SMB team are looking to talk to firms about during this week’s event. "Unless you have worked out the total cost of ownership of a specific product or solution, you will not be able to identify clearly and comprehensively the return on that particular investment," warns Hamid Hassan, SMB manager for the Middle East. "A deal may look great at the outset but unless factors such as integration, implementation and ongoing support have been factored in then SMBs are not seeing the full picture,” he adds. “There is clearly a need to educate and inform SMBs in the Middle East about this vital area to enable them to realise fully their return on investment in IT.” HP’s study found that while 39% of the firms questioned believe they are able to quantify ROI, only 5% who have been able to quantify ROI believe that they have recovered 100% of their investment. Aside from the need for SMBs to better calculate the likely payback of any purchases, security is a theme very much at the forefront of these firms’ collective thoughts. HP found that the importance of putting in place security measures to protect the business from everyday IT threats to large-scale natural disasters is recognised by an overwhelming majority of SMBs, with 88% of its study’s respondents claiming that security solutions play a very important role in ensuring the smooth running of their IT infrastructure. Adding to this, 62% agreed that enterprises that don’t invest in security solutions are more likely to go out of business than ones that do. With reference to HP, Hassan reckons this collective consciousness in part explains why the company’s Business Protection portfolio is meeting with some significant success.

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