BOSTON, MASSACHUSETS: The annual small and midsize business (SMB) IT spending study AMR Research, which was released recently, has found that 64 percent of SMBs will increase their IT spending by an average of 5.3 percent in 2008. 

According to the report, the main reasons for this IT budget increase include outside-in pressures such as meeting customer demand and handling increased competition and internal pressures such as increasing efficiencies and decreasing costs.

Currently, SMBs are focusing a majority (49 percent) of their budgets on applications that help them run their businesses.  But applications that support innovation (25 percent) and growth (26 percent) are increasingly important as well. 

"Traditional thinking and spending patterns have led us to assume that SMBs prefer to maintain current levels of IT investment and focus primarily on running the business," explained Simon Jacobson, senior research analyst at AMR Research.  "But this year's respondents indicate an even split between running the business and the desire to innovate and grow the business. This is intriguing for a market segment that has traditionally been characterized as 'strapped for IT resources' and focused largely on sustaining current market position."

The most strategic software investments for 2008 will be in customer management applications (18 percent), an investment that reflects the increased customer demand many SMBs are facing.  But, according to the report, companies are planning to focus their strategic investments in business intelligence (BI) and performance management (PM) applications in 2010.