14 May CDW: Falling technology confidence spreads to mid-sized companies
Vernon Hills, Ill. – Declining confidence in the future direction of the American information technology industry has spread to medium-sized businesses, according to the latest findings of the April CDW IT Monitor, a bi-monthly indicator of sentiment in the U.S. IT industry.
Declining confidence, which so far has been felt most in the small business space, plunged seven points in the medium business segment between February and April of 2008, and now stands at a reading of 70.
CDW Vice President Mark Gambill said the survey results are not a surprise. “What’s happening is very logical in terms of the after-effects of economic uncertainty,” he said. “At first, people are in a bit of a wait-and-see mode.”
Overall, the IT Growth Monitor, a sub-index measuring anticipated investment in IT, dropped one point to 72, compared to February’s reading of 73. The monitor is based on an online national survey of 1,000 IT decision makers in business and government.
Declining confidence also was seen in the IT hiring plans of mid-sized businesses. According to CDW, 21 percent of medium-sized businesses expect to hire IT staff in the next six months, which is down 10 points from two months ago.
Pockets of strength
Confidence among large businesses, which are impacted less by the onset of economic change, remained steady with a reading of 80.
Gambill said there are industry sectors that continue to remain strong from an IT need and spend perspective, but there are other technology areas that also require investment. “I think CIOs clearly are going to want to look inward to their companies and see what is most critical for their ability to grow as an organization – certainly security, unified communications, and mobility are key drivers,” he said. “Virtualization helps a company become more efficient, especially when you look at the cost of power and cooling, so there are going to be areas where there is going to continue to be a need to invest.”
On a macro basis, however, he said people now are trying to hold off on things like a notebook refresh – something they would normally do on a periodic basis.
The declining confidence of technology decision makers has not resulted in a lack of value placed on IT in general. According to the monitor, 82 percent overall, including 88 percent of medium-size businesses, believe information technology is effective in helping their company achieve its objectives.
In addition, the perceived value of IT, which registered a reading of 76, remains unchanged from the February report.
Gambill said the value they place on IT is related to the business value that technology has brought to their organizations. “I think that’s a logical assumption to be drawn from that high of a reading,” he said. “It’s like anything that’s new, and technology is not new, but with the velocity of change, as far as an ability to help your company and your employees become more productive, it really is starting to show up more and more.
“The fact we can work 24 hours a day through our Blackberries and wireless connections to a laptop, through a secure firewall, that absolutely helps a company continue to get things done.”
Gambill said the numbers don’t mean that IT spending has come to a halt, but that organizations are prioritizing. He referenced a “barbell” effect in which organizations probably are moving forward with investments at the ends of the IT spectrum – large enterprise migration at one end and small equipment replacement a the other end.
In an uncertain economic environment, Gambill sees hesitancy on the part of technology managers to invest heavily in new staff or infrastructure. “What a lot of companies typically do when they lose someone is they don’t automatically replace that person,” he said. “They try to get by with less, and technology can fill that void just because of the applications and the ubiquitous nature that it provides a company and its ability to succeed.”
CDW Corp., a computer products firm based in Vernon Hills, Ill., is the parent company of Madison’s CDW Berbee.
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