IT budgets to increase in the next six months

The Canadian SMB and Enterprise Market: 2005 is the latest edition of Evans Research Corp.’s annual study of business IT purchasing in Canada.

The study results are based on 625 interviews with IT professionals across the country. It tracks purchasing and leasing practices, hardware, software, and services among firms with 10 or more employees. Here are some of the highlights of this year’s study.

Of the many business challenges facing companies today, the most important is improving productivity. In smaller firms, the president and/or owner usually has final purchasing authority with respect to IT products, while in larger companies the head of IT generally has the final say. The Internet and e-mail are the top sources of information for IT products and services.

Product knowledge and technical support are the key determinants in supplier selection. Local dealers are the preferred purchase source for both products and services. Although primary supplier switching is relatively infrequent, supplier loyalty is down this year.

Just a quarter of companies lease any of their computer equipment, and the vendor usually handles the lease. The most common lease term is three years. Of those IT decision makers who are not currently leasing, the proportion that would consider leasing is down this year.

Over the next twelve months, IT decision makers will be growing their IT budgets, creating a net increase in spending on hardware, software and services. Hardware will continue to account for the bulk of spending.

Dell is the most widely installed brand for PCs and notebooks, and it shares the crown with Hewlett-Packard for servers. Buying intentions reveal that Dell is expected to maintain or expand its lead in all three of these product areas during the next twelve months.

Cisco is still the top choice for networking hardware. In networked storage, Hewlett-Packard, Dell and IBM are in a three-way battle for the top spot. Buying intentions show that Hewlett-Packard and Dell will emerge as the leading vendors next year.

Cost is the main selection driver when purchasing software, and the most popular applications are security and networking. In the coming year, security software will be the most widely purchased application.

Cost is also the overriding factor in selecting an external service supplier (for services other than maintenance). Web site hosting is the most commonly outsourced service. Four service areas – Web site hosting, security, IT consulting and business continuity – enjoyed increased usage this year. Offshore outsourcing continues to be extremely rare in Canada.

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Jim Love, Chief Content Officer, IT World Canada

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