Springtime for SMB IT Purchases?

Spring appears to be arriving after the long winter of the 2008-2009 recession.  If you’re like me, it can’t come soon enough.

Listening to the incessant drum beat of financial crises, stock market dips, lowered company earnings and slashed  budgets, you can easily fall into a mindset that bad news is here to stay.  Relentless bad news creates a climate of fear and uncertainty.  It weighs you down, if you let it.

Luckily, the cycle of bad news leading to worse news is not permanent.  One of the good things — some would say the ONLY good thing — about recessions is that eventually they end.

In the past two weeks we’ve seen a number of positive — although weak and emerging — signals that economic  recovery will start in the second half of 2009.

For instance, the Washington Post reports that the economy is showing signs of stabilizing.  Notice they didn’t say “growing” or even necessarily “improving” — just stabilizing.  But after months of everything seeming to get worse with each passing day, that’s a positive sign.  The article relies in part on the relatively optimistic remarks of Fed Chairman Ben Bernanke in the past week.

In another report, Marketwatch says that the tech outlook is showing signs that recovery may be near.  Although many large publicly-traded tech companies no longer give predictions on their upcoming quarter’s financial results, some executives are making cautiously-positive noises in speaking engagements and remarks to reporters.  Research firm IDC is now predicting that we will see a tech recovery in the second half of 2009.

But to me, perhaps the most encouraging sign of a recovery is the sentiment of business executives themselves.  Do IT decision makers feel optimistic about the near future, even if money is incredibly tight right at this moment?  What are executives planning?   In this context, the condition of the stock market or credit markets is less relevant than the actions we expect to take in our own companies.

One positive sign of executive sentiment comes from IT Retailer CDW.  CDW does a bimonthly survey of IT executives called the CDW IT Monitor. The most recent CDW IT Monitor from April 2009 finds that decision makers in small and mid-size businesses are looking more optimistic about their plans to invest in technology before the end of 2009:

“After more than a year of confidence decline, the first tentative signs of IT growth are appearing. According to the latest CDW IT Monitor, an increasing number of IT decision makers from small and medium-size business sectors anticipate investment in the next six months.

According to the latest survey, 29 percent of small business IT decision makers expect budget increases in the next six months, an increase of seven percentage points from February. Additionally, 18 percent of medium-size business IT decision makers anticipate hiring in the next six months, an increase of six percentage points since February.”

So the headline here is that small and midsize businesses are leading the way with an intention to increase or once again start making IT investments.  In fact, medium size businesses (100-999 employees) may be the most optimistic as this chart from the Monitor shows (notice the uptick in the red line since February):

The survey actually was conducted during March 2009, before most of the other positive economic signs started appearing.  That makes the data even more interesting.

And why are IT decision makers going to invest in IT?  Well a number of possibilities come to mind, including:

(1) IT decision makers expect sales at their own companies to improve in the next six months (or perhaps sales are already showing signs of improving).  There is in fact some survey data from the CDW IT Monitor suggesting this is how medium-sized business executives feel.  As a result, they expect budgets to ease up and to have more money to spend.

(2) Small and midsize businesses already may have cut expenses to the bone, and have held back on new purchases to the point that they can wait no longer.  All those deferred purchases grow more urgent and necessary as time marches on.

(3) Or it may simply be that forward-thinking IT executives know the value of investing in their IT to get a jump on the recovery.  Companies have to invest to make money and grow.  There’s a lot to be said for getting a head start as the economy improves.  Sometimes winners are simply those who managed to outlast their competitors, keep their cool, and seize on opportunities when things start picking up.

Whatever the reasons, I look forward to seeing many more positive signs of economic growth.  Here’s to the economic recovery ….