Mid-size firms get IT budget boost

Most mid-size businesses expected to see their IT budgets increased over the next 12 to 18 months, an IBM survey has shown.

Almost two-thirds of respondents believed they would have more cash to splash on IT, compared to just 11 per cent in last year's poll.

Nearly a fifth said they expected their IT budget to remain unchanged in 2011 and 19 per cent thought it would decrease or were unsure.

"When we surveyed medium-sized firms 18 months ago, most were focused on reducing costs and improving efficiencies," said Lubomir Cheytanov, midmarket business leader for IBM UK and Ireland.

"Today, the conversation is also about expanding their business, connecting with customers and gaining greater insights."

As for where companies were planning to spend their money, 70 per cent cited cloud computing technologies, whilst 72 per cent were looking at analytics.

"Cloud computing delivers many tangible benefits, including eliminating initial capital expenses for IT systems as well as increasing CPU efficiency and reducing energy consumption - benefits particularly important to midmarket customers given tight economic conditions," said Andy Rigby, managing director in EMEA for IBM partner Virtustream.

"As such, we've seen a steady increase in interest from mid-size companies who are looking for trusted technology partners that can address and eliminate many of the obstacles of widespread cloud computing adoption, such as security and availability concerns."

Getting carried away?

Although such data indicated companies had turned a corner in the post-recession environment, one expert warned about possible "over-heating" of the market.

Bob Tarzey, an analyst at Quocirca, said vendors might get overexcited by results from this year as firms started spending again, only to be disappointed by weaker sales in the next year as the refresh cycle ended.

Furthermore, the market should not get too carried away with cloud computing, Tarzey suggested.

"It is an important area of growth and it's where a lot of companies are looking, but it's still only about five to 10 per cent of the overall IT market," he told IT PRO.

"It's still at sub-10 per cent level, whichever way you look at it."

However, Tarzey said growth in the uptake of cloud services and the revenue represented by that was faster - compared with the overall IT market.

Recent data from the Centre for Economics and Business Research suggested cloud computing could help boost the economy across Europe by 763 billion (650 billion) in the next five years.