SMB IT spend driven by professional services

SINGAPORE: Small and medium businesses (SMBs) are increasingly using IT services to reduce operational costs, ensure productivity, maintain competitive edge and support growth in the face of the economic downturn.

A recent study by AMI-Partners said that the impact of the global economic crisis has led these SMBs to tighten their IT budget purse strings as many are keen to see concrete benefits from their investments in IT.

In 2008, IT services spending among SMBs in Australia, Japan and Korea exceeded US$23 billion, mainly driven by professional services, which accounted for almost two thirds of the total IT services spending.

According to AMI, over the next 5 years, spending on IT services is expected to post a compound annual growth rate (CAGR) of over 10 per cent.

“IT services is a growth area for these SMBs because companies want to be able to minimize operational expenses and devote valuable resources to their core businesses ensuring the delivery of quality products and services to their customers,” said Augusto Roman P. Carlos, IT Services senior analyst at AMI-Partners Singapore.

The key opportunity areas for IT services spending are centered on development and integration, IT management and process management, said the study.

Carols added that with these SMBs typically having mature ICT infrastructure, requirements are mostly focused on integrating hardware and software that allow businesses to be operationally efficient and competitive in the global business environment.

He further said, “Moreover, they want assurance that their systems and processes function effectively on a daily basis and that any IT issues will immediately be resolved and disruptions minimized.”

Specifically, IT management is an important aspect of IT services because it allows companies to satisfy requirements that cannot be addressed internally and has proven to be a cost-effective option but still, key business challenges remain for SMBs.

AMI's study suggested that vendors must have the right market intelligence and framework in place to be able to seize a piece of the developed APAC IT services pie.

Carols said that further educating SMBs on the benefits of engaging in IT services and assuring them of the security of their IT management needs, especially if they are considering outsourcing, will greatly benefit businesses and vendors alike.”

“Moreover, understanding the SMB IT decision-making process and key influencers, what their main sources of information are, and who are the channels used will be the key components to driving IT services adoption in the developed APAC region in 2009 and beyond,” he added.