Market research firms predict that small businesses in the U.S. will start buying computers, peripherals and network gear again this year. While this might be good news for small business technology vendors, there are others who believe there are valid reasons to hold off on IT hardware spending.
Small businesses are still gun shy, and rightly so, says Robert Garmaise, senior vice president of research and strategy at Info-Tech Research Group Inc., a firm that provides IT research and consulting services to small-medium businesses.
“I think it’s very slow, if there’s recovery at all,” Garmaise says. “I’d certainly say that six months ago we were still in free-fall. Companies were cutting back pretty aggressively. Now, they’re trying to keep costs flat or show only marginal increases.”
And that’s probably what they should be doing, he adds. Garmaise has some great ideas about how to achieve this. More on that a bit later.
The industry, of course, has different ideas. It is “cautiously optimistic” about the turn-around, according to Brian Burch, director of marketing for small business at HP.
Burch believes many small business have clung on to dated equipment for a long time, partly because of the recession. “I think this will be the year of the refresh, and that we’ll see a lot of intelligent buying by SMBs this year,” he says.
Small businesses have much to gain — and money to save — by investing in computer upgrades now, Burch contends. New PCs based on the latest processors from Intel and Microsoft’s new operating system Windows 7 can deliver a three-times increase in productivity, he says — while reducing electricity consumption by 50 percent.
Furthermore, HP is offering financing options through its commercial resellers that give small businesses one year of financing at zero percent interest for purchases over $1,500. And it offers a trade-in allowance on used laptops and desktops — on average $100 for laptops.
HP hopes that these combined factors will persuade small business owners that this is the right time to refresh their laptops and desktops.
Maintain IT Infrastructure Status Quo
Garmaise’s firm, however, is still focused on helping companies find ways to not spend money on IT, and one perfectly viable way of doing it is to not refresh.
A lot of smaller companies are taking a “run-it-into-the-ground type of approach” to managing their desktop and laptop computing infrastructure, he says. And within reason, there is nothing wrong with hanging on to computers for a year or two longer than in the past.
You don’t want to push it too far,” Garmaise says. “But we’re not hearing a lot of horror stories from companies that are doing it.”
Some companies, especially those with IT departments, have a tendency to upgrade computers more quickly than necessary without really justifying the cost decision, says Garmaise. “IT tends to fall in love with infrastructure.”
Burch, on the other hand, points out that small businesses may incur higher maintenance and repair costs, as well as frustrating constraints on productivity and connectivity, because they continue to use gear that’s past its best-used-by date.
To stay alive and competitive, small businesses need to strike a balance and think more carefully about when to upgrade equipment — and in general, how they spend their IT dollars.
Instead of asking “Should I keep up with the latest technology,” Garmaise suggests that the better question to ask is “What do I need to meet this year’s goals or my long-term objectives?”
Rather than spending on a previously scheduled equipment refresh, many small businesses, according to Garmaise, are taking “more of the capital spend, if there is any, and applying it to business application projects that show a specific ROI — a revenue kicker or a cost reduction.”