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SMBs weigh in on post-election IT spending plans

CIOs of SMBs appear confident with the business climate, but are in no rush to increase their IT spending plans.

IT executives at some smaller organizations said the reelection of President George W. Bush is good news for the economy and for their companies, but many aren't making any big spending plans just yet.

CIOs said Bush's support for lower taxes bodes well for SMBs. But they also cautioned that unpredictable factors -- like the war in Iraq -- have the potential to derail the economy.

Brian Clayton, manager of information systems at Sebaly Shillito & Dyer, a small law firm in Dayton, Ohio, said that even though there are definite signs of economic improvement, his company plans to wait another year before embarking on any major IT projects.

For SMBs, Clayton said, the biggest positive thing to come out of the election has nothing to do with Republicans or Democrats, but that policies are generally going to remain the same.

"By staying with the same administration, I don't think we're going to take a big [economic] hit," Clayton said. "Some of the things we're used to are going to continue."

Larry Davis had a slightly different view of the situation. The CIO of Sterne, Agee & Leach Group Inc., a medium-sized retail brokerage house based in Birmingham, Ala., Davis agreed that the economy is good and should continue to grow. But, he added, having the same party in control of the Congress and the White House isn't always good news for certain financial industries, namely securities.

"In the securities business, sometimes it's better if you have got the Clinton model where there is a Democratic president and a Republican House and Senate," Davis said. "Then nothing can happen and … thus there are no new regulations and so on."

Beyond that concern, Davis said the reelection of Bush will probably mean lower taxes for SMBs.

Presidential contender John F. Kerry "was going to ultimately hammer the small business environment, and Bush just isn't going to do that," Davis said.

Mitch Myers, vice president of operations for medium-sized manufacturer FWMurphy in Tulsa, Okla., said the Bush administration is friendly to offshore outsourcing, and it is likely that the next four years will see smaller companies taking up the practice.

"I think the trend is to take commodity, high-labor content business and offshore it," Myers said.

Barbara Gomolski, a research vice president and analyst with Stamford, Conn.-based Gartner Inc., said that while it's true that Bush is unlikely to raise federal taxes on SMBs, those companies can probably get a better picture of their economic futures by looking at the results of state and local elections and ballot questions.

"I think [the financial situation] gets more interesting when you go state by state," Gomolski said. "For instance, in California they're trying to become more employer- friendly because [the state] has been a notoriously bad place to do business."

Despite the growing economy, Gomolski said she expects continued conservatism in IT spending, as companies are still catching up with systems they bought during the late 1990s. There is also a lack of compelling new technologies, or "killer apps," that businesses simply can't do without, she said.

Meanwhile, Gartner predicts that worldwide spending on IT will increase by a modest 5% in 2005.

"Regardless of who won the presidency, from an IT perspective it's still a very incremental and slow crawl back to health," Gomolski said.

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