Microsoft has released its second annual Microsoft SMB/Partner Insight Report, a study on small and midsize businesses (SMBs) and their technology priorities in the current economy.

The study shows that although SMBs remain concerned about the business climate, most will increase technology spending in 2010, highlighting the role of IT as a strategic business tool in this crucial sector of the global economy. SMBs will invest in IT that directly benefits their bottom line — either by reducing operating costs, improving employee productivity, or acquiring and retaining customers.

In the study, based on a survey of Microsoft Small Business Specialist partners, 63% of respondents predicted their SMB customers will spend more on IT in 2010, up from just 25% in 2009, with overall SMB IT spending anticipated to rise by an average of 16% over 2009 levels. Results from more than 500 partners in the U.S., U.K., Canada, Brazil and India indicate that SMBs view virtualisation, IT consolidation, software as a service, customer relationship management (CRM), and support of remote workers as their most important technology investments.

“The most competitive SMBs are investing in IT that will not only help protect and strengthen their business, but prepare them for success when economic conditions improve,” said Birger Steen, vice president of Small and Medium Business & Distribution for the Worldwide Small and Midmarket Solutions and Partners Group at Microsoft. “Technology can buoy smaller businesses through turbulent times — and which technologies SMBs choose can help determine the speed of their return to financial stability.”

Looking for Strategic Guidance on IT Investing

Most SMBs lack dedicated IT staff, and rely heavily on local technology partners to help them evaluate, implement and maintain the right IT solutions. Facing increasingly complex IT options and a challenging economic environment, SMBs are now looking to these partners to provide more strategic guidance that is better tailored to their business, vertical and industry, the study found. Microsoft Small Business Specialists forecasted that customers would look to them most for help with cost-reduction measures, increasing remote management, and a “one-stop” experience aligning technology with business needs.

Other key trends in the 2010 Microsoft SMB/Partner Insight Report include:

  • 41% percent of SMBs view server virtualisation or IT consolidation as the best cost-saving technology
  • SMBs rank software as a service among the top three technology solutions for both cost savings and business growth; Small Business Specialists expect to see a 19% increase in small and midsize customers using cloud solutions in some form
  • 74% of Small Business Specialists believe their customers will have more remote workers, up from 54% in 2009; the estimated 19% average increase in remote work force is expected to drive demand for mobile solutions
  • Most Small Business Specialists expect customer relationships to be dynamic in 2010; just 6% of respondents predict no change.

Recent industry research confirms many of these findings and attests to the importance of SMBs to the economy. According to James A. Browning at market research firm Gartner Inc., “The SMB market represents 44% of the total IT market spending. We predict that SMBs will spend $800 billion on IT in 2010. Our research indicates that midsize businesses worldwide will increase their IT spending in 2010 by 5.4% over 2009 spending levels.”

The complete 2010 Microsoft SMB/Partner Insight Report is available at