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SMB checkbooks cracking open

It looks like SMBs really are starting to spend more IT dollars, but some CIOs still have a "wait and see" attitude.

Small and medium-sized businesses (SMBs) appear to be making good on earlier predictions that they would be spending more money in 2004.

Not torrents of cash, but more money than in the previous few years.

Analysts said SMBs are finally cracking open their IT checkbooks after many quarters of hibernation, and they seem willing to buy the tools they need.

"Companies are essentially sticking to upgrading networking components like software and storage," said Christine Liebert, senior research analyst for SMB strategies at Boston-based Yankee Group.

"We're also seeing them loosen up money that's centralized around products that impact network security and their ability to recover from an outage," she added.

That's exactly what Ron Dinwiddie, CIO of Midwest Independent Bank in Jefferson City, Mo., is looking into for his firm.

Within the past 12 months, Dinwiddie's department has implemented network monitoring; increased network security; upgraded server switches, PCs and its generator for 100% backup in case of power failure; and invested in applications for internal process automation. It is currently looking for another facility for a hot site.

It's been a busy year for this first-time CIO.

"We've spent a lot of money this year," he said. "I've gotten pretty much everything I wanted. We're looking into biometrics now."

Given all the money Dinwiddie has spent this year, 2005 may not be quite so flush with cash, although he said that it's too early to know for sure.

"I'm not anticipating any major purchases or upgrades, but that could change if one of the business units says it needs a new application that requires resources," he said. Dinwiddie does know that fighting spam and upgrading off-the-shelf applications will continue into 2005.

Despite some PCs that he admits are showing their age (some machines are still running Windows 95), Richard Service would rather not go on an IT spending spree.

"My goal is always not to spend a dime, because every dime I spend is money we don't get to spend at our production facilities," said Service, CIO of St. George Crystal Ltd. in Jeannette, Pa.

Service, who has bought J.D. Edwards products in the past, would like to upgrade his firm's ERP software, is waiting to see how the PeopleSoft/Oracle deal shakes out before he makes any decisions. PeopleSoft acquired J.D. Edwards before Oracle made its hostile takeover bid of PeopleSoft.

"We will have to spend some money on security issues like spam, antivirus and spyware," he added. "We in the IS industry need to get better at letting the network authenticate users -- I know I have to do that, but I'm not sure how."

Arkady Rubinsteyn, CIO and CTO at the BIR Training Center, a career and language learning center based in Chicago, echoes the theme of doing more with less.

"We will be spending as little as possible, not planning new projects until April of 2005," he said. "So we are spending less."

Rubinsteyn added that, as far as he knows, many SMBs share a mood of uncertainty.

For more information

SMBs may be smarter spenders in '05

SMBs lag behind in enterprise app adoption

Could SMBs save money by offshoring?

"Let us wait and see," he said.

One thing is certain -- SMB CIOs are earning their keep.

"They can't get by with working on projects that they want to experiment with or test," said Yankee analyst Liebert.

"They need to work with projects that deliver actual results to impact the bottom line immediately or soon thereafter."

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