Microsoft Study: Small Businesses Using Technology to Cut Costs

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March 26, 2009,

Microsoft Study: Small Businesses Using Technology to Cut Costs and Grow in '09

While all types and sizes of business are affected by the recession, some experts believe that small businesses will lead the way to economic recovery. A new report from Microsoft outlines how small businesses are expected to maintain a stronger-than-average commitment to IT as a strategic investment to cut costs and increase sales.

Microsoft surveyed more than 600 of their Small Business Specialists in the U.S., Canada, the U.K., France and Brazil and produced the first annual “Microsoft SMB Insight Report”, which predicts a majority of small and midsize businesses will maintain or increase IT spending in 2009.

The study found that the major concerns driving IT investments are declining revenue, competition from larger businesses and general economic difficulties. As a result, many of these companies are focusing on IT investments that contribute directly to their bottom line, like reducing costs, boosting productivity and getting and keeping customers.

“Historically, we have seen that SMBs have responded to economic contractions by intensifying their use of IT, both to cut costs and to defend and enhance their customer relationships,” said Steve Reynolds, managing director for AMI-Partners. “If SMBs respond to the current crisis as they have in the past, we can expect that a sizable number of smaller businesses will invest in IT now to lower operating costs, boost employee productivity and increase connectedness to customers so as to reap the benefits in the years ahead.”

The report outlines several trends that Microsoft expects to unfold in 2009:

  • Strategic IT Investments Bolster the Bottom Line. Smaller businesses will continue to view IT as a strategic asset, a cost cutter and a means of increasing employee productivity. Lower spending does not imply lower value or reliance.
  • Lower Budgets Mean Less Has to Be More. Streamlining IT through virtualization or server consolidation will increasingly be viewed as reliable means of adding business capabilities while reducing management and overhead costs.
  • Service and Responsiveness Are Key to Customer Retention. The parallel objectives of improving employee productivity and delivering a better customer experience will drive SMBs to look at how they can better leverage the collaboration, mobility and business insight tools they already have, followed by strategic investments in these areas as incremental return on investment is achieved.
  • Smaller Companies Will Increasingly Adopt Cloud Computing. More smaller businesses will adopt cloud-based solutions as the economic climate drives demand for solutions that are affordable and flexible and offer financially backed service-level agreements. Smaller businesses will remain cautious, however, and will closely evaluate the security, reliability and interoperability of cloud-based offerings.
  • Better Together: SMBs Rely on Trusted Partners. Small and midsize customers will turn more to vendors and value-added resellers (VARs) to help improve their bottom lines. Expect VARs to work harder to show that they understand SMBs and deliver more personalized communication and greater depth of expertise as they compete for business.

Additional findings of the survey include:

  • SMB IT Spending: 55% of Microsoft Small Business Specialists forecast the same or higher spending among SMBs. However, 45% indicate lower spending levels in 2009.
  • Reducing Costs: Reducing staff and IT costs are most often indicated as the ways SMB customers are surviving the economic downturn. Only 6% indicate no change in behavior.
  • Cost-Saving Technologies: Virtualization and IT consolidation via small or midsize servers lead the list of the best cost-saving technologies, but investments in these areas lag their importance. Interest in SaaS generally matches its current investment level, while some over-investment is indicated for mobile solutions, unified communications and especially CRM.
  • Business Intelligence: Small Business Specialists believe that SMBs will continue to have an interest in business intelligence, with 39% anticipating an increase.
  • Software as a Service (SaaS): Small Business Specialists indicate a growth of 20% in SMB customers’ use of SaaS in 2009, from 66% in early 2009 to 86% by the end of the year.
  • Productivity: Unified communications solutions have the highest level of demand among productivity tools.
  • Security: Demand is greatest for IT security policy enforcement and data storage among SMBs considering security and preparedness.
  • Remote Workers: A majority of Small Business Specialists believe their SMB customers will increase their remote worker base and will expand the role/job function of remote employees in 2009.
  • Reflecting this trend, over two-thirds of specialists anticipate an increase in demand for mobile solutions.
  • The U.S. expects the largest increase in the role of remote workers in 2009
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