SWC Technology Partners Survey Campaign Uncovers Trends in Midmarket Information Technology

October 29, 2009   //   News

Oak Brook, IL | October 29, 2009 – IT consulting firm SWC Technology Partners has launched a survey campaign that will reveal the evolving trends and tempo at middle market IT departments. The information technology surveys will provide new insight into the climate at Midwest businesses as they re-prioritize, make do with fewer people and smaller budgets, and work to increase or maintain market share in an increasingly competitive marketplace.

The first SWC survey gauged the moods of 170 IT decision makers at midsize businesses and divulges which projects hold top priority, which deliver the greatest ROI and which areas are seeing the most staffing cuts this year. At the same time, the survey exposed a potential risk and a paradox that illustrates the current climate at many Midwest businesses.

IT and business-line managers taking part in the survey shared their opinions on the technologies, strategies and tactics generating the greatest impact during this challenging economy. The majority of responders were IT senior leaders from organizations in Illinois, Wisconsin and Indiana in industries including manufacturing, retail, education, construction, healthcare, accounting and non-profits. More than half of the respondents manage environments with a user base between 100 and 2,000 individuals.

The Economy: Lower Revenues Yet Higher Market Share

More than 58 percent of respondents report lower revenues and 46 percent see decreased profit margins this year. IT budget cuts or freezes have affected 62 percent of respondents. Yet, 89 percent of respondents report they have either maintained or increased market share. Only 11 percent say they have lost market share in recent months.

Of note is the contradictory manner in which the shrinking economy has translated into market share. SWC President Bob Knott believes this could be a result of the recession “weeding out” poorly performing businesses and the net outcome is an increase in market share for stronger providers. Additionally, companies may be tapping into new technologies to amplify their marketing effectiveness, business intelligence and operating efficiencies. Either way, Knott acknowledges that the survey respondents represent a more successful group of organizations than the general business population.

IT Priorities: Security Rises to the Top

Respondents cite security as the highest priority technology project category, with 55 percent indicating it holds top importance. Business intelligence is the second highest priority, with 38 percent saying it is highly important. Other top priorities are storage, web development and LAN/WAN infrastructure. The least important technology project category is proprietary systems, with 57% indicating it holds low importance.

Of interest is that security projects typically have little or no impact on revenue generation or creating operational efficiencies. This may reflect the fact that IT managers are focusing their limited resources on crucial areas that cannot be compromised, or it may be that that this category has been neglected during the recession and managers fear the consequences of such neglect.

Staffing: Application Development Grows; End User Support Shrinks

IT staffing levels remained generally steady for respondents over the past year. However, the area seeing the greatest increase in staffing (13 percent) as well as outsourcing (6 percent) is application development, not surprising as you consider the complex, customized ERP and/or proprietary environment work that are typically seen as mission-critical.

End user support was cited most often as experiencing a reduction in staff (13 percent of respondents), followed by network management and email management. These figures may reflect a trend to outsource these functions to a third party through managed services. At the same time, all categories surveyed saw a net decrease to internal staff.

Technology ROI: Virtualization, Collaboration and Web Development Deliver

Survey respondents cite virtualization as the technology with the greatest return on investment justification (109 votes), followed by collaboration/document sharing (97) and web development (90 votes) as most often having either high or medium cost justification. Respondents rate proprietary systems as having the lowest ROI justification.

ROI has been thrust to the forefront of any mid-market business decision. Determining which technology provides the greatest, and more often, the fastest ROI has become a first step in selecting which projects to advocate to senior leadership.

Virtualization technology – consolidating multiple computing environments into virtual servers that run on the same physical machine — is the clear winner in this category. Virtualization has become a widely adopted and accepted platform to consolidate and manage server infrastructure, thereby reducing costs associated with hardware acquisition and management as well as reducing the physical footprint of the server room itself.

Those surveyed also report that collaboration and document management technology provide great efficiencies around workflow and business processes. Enhancements to document management help them reduce inefficient periods of search and content creation.

The Risk of Reliance on a Single Individual

Forty percent of respondents indicate that their organization is absolutely dependent on a single individual for his or her systems knowledge and expertise. Only 8% of respondents say they never had an absolute dependency on a single individual for his or her systems knowledge.

This dynamic has presented itself frequently within the mid-market, and the SWC survey responses support the fact that dependency on a single IT professional remains relatively prevalent. While the survey did not explore the vulnerabilities this situation presents, budget cuts, reduction in staffing and islands of dependency can become a recipe for disaster. It may be this formula that has led to the increase in managed environments noted earlier.

Looking Ahead

Overall, 51 percent of respondents categorize their business outlook for the next 12 months as “cautiously optimistic.” However, slightly more than eight percent say they are pessimistic, and three percent classify themselves as “highly pessimistic.”

Bob Knott, President of SWC Technology Partners, said, “This survey provides insight into what drives the technology decisions in the middle market right now. The biggest surprise to me was the degree of reliance on a single person for IT oversight and expertise, and the fact that survey participants report a stable or increased market share despite budget and staffing reductions. After analyzing these results, we’ve decided to conduct additional surveys to delve deeper into these issues and look beyond the numbers to understand what’s driving these actions.”

A follow-up survey will reveal whether technology priorities have shifted as the calendar year concludes, whether staffing reductions flatten and whether top-line technology priorities change. SWC also seeks to uncover the factors that enabled companies to maintain or increase market share despite cuts in IT budgets and staff.

About SWC Technology Partners

SWC Technology Partners (www.swc.com) is a leading provider of innovative IT solutions to small and medium-size Chicago businesses. For nearly 30 years, SWC has excelled at providing strategic guidance and delivering solutions tailored to the needs of growing organizations. SWC’s areas of expertise include best-in-class Managed Services, Performance Management, Business Applications, Messaging & Collaboration and Network Infrastructure & Security solutions. Headquartered minutes from Chicago in Oak Brook, Illinois, SWC is a Microsoft Gold Certified Partner, a Symantec Gold Certified Partner and a Hewlett-Packard Enterprise Partner.