2007 SMB IT Budget Outlook: North America

Business optimism is high in 2007 for small and medium-size businesses (SMBs). Unfortunately, this will not translate into large IT budget outlays; in fact, SMBs report an average budget increase of just 2% over actual spend in 2006. New investment spend levels will remain flat at 26% of IT budget, but spending on research and development (R&D) and security will rise 1%. At a combined 49% of IT budgets, staffing and computer hardware will consume the lion's share of IT budgets. Improving the efficiency of IT is a critical priority for 20% of SMBs, and 33% of SMBs will make the measurement of IT's impact on business performance a priority. The top IT initiatives for 2007 include upgrading disaster recovery and security capabilities, and replacing/upgrading server hardware, with the top software purchases being of security and Web applications. Thirty-seven percent of SMBs say it's very important to provide a business case in order to secure funding for IT projects, and return on investment (ROI) is the most commonly used tool, with 66% of companies utilizing it.