Survey Reveals Emerging Trend: SMBs Using Hosted IT Infrastructure Gain Strategic Business Benefits While Spending Much Less

April 10, 2007; 01:07 AM

HOUSTON -- A new survey of small businesses reveals dramatic differences between companies that use hosted IT infrastructure and those that manage IT internally. The study by BizTechReports.Com, The Small Business Transition to Hosted Technology: Costs vs. Benefits, shows that small- and medium-sized businesses (SMBs) using hosted IT achieve stronger business benefits from their IT investments – and are typically more satisfied compared with those who manage technology in-house. Results of the study – with participants from 17 vertical industries – were announced today by The Planet, now the world’s largest privately held dedicated hosting company.

The study also underscores significantly less IT spending as a percentage of revenue by SMBs that outsource.  These same companies also support a greater number of strategic applications and operations.  Concurrently, the companies that host suffer fewer security incidents and technical failures.

The report results reveal SMBs that outsource their IT infrastructure are leveraging their technology resources to generate additional top-line revenues while improving bottom-line results. In fact, SMB outsourcers are more than twice as likely to expand sales revenues by engaging in e-commerce – which requires a higher degree of infrastructure reliability – to expand sales revenues compared with those who manage IT internally. SMBs that host are also twice as likely to use cutting-edge technologies and approaches such as Software as a Service (SaaS).

“These findings illustrate a powerful trend taking place in the SMB technology market,” said The Planet’s Vice President of Marketing, Steven Kahan. “The growth of the hosted infrastructure model is enabling smaller companies to compete on an equal IT footing with big business, particularly with powerful e-commerce applications that drive top-line revenues.

“It’s the ‘tyranny of the or’ – whether companies take the ‘do-it-yourself’ approach or pursue a more aggressive, less costly new path,” noted Kahan. “Many of our own 22,000 customers in small- and mid-sized businesses have struggled to make the decision about relinquishing control. What they have found is that by using hosted technology, they are leveraging IT more cost effectively and strategically than ever before to gain operational and business benefits that contribute directly to bottom line results.”

According to BizTech Reports.Com CEO Lane Cooper, who conducted the survey, the results offered insights far beyond his own personal expectations.

“Small and medium businesses are much further along the sophistication curve than one would have expected when it comes to using technology to enable their businesses and build revenue,” said Cooper. “The survey shows SMBs are putting just as much thought into aligning technology investments with business objectives as their larger counterparts. Companies that host are clearly gaining valuable benefits, with the most compelling argument that they are doing more, spending less and gaining tremendous benefits by focusing on their businesses, rather than on IT management.”

The study clearly underscores that the shortening lifecycle and shelf-life of technology – and the declining costs – make IT investments far less attractive.  Using the hosting model, SMBs can “rent” the technology, adding or contracting services to meet seasonal peak performance requirements.

The survey consisted of more than 325 SMB senior executives, half with companies that outsource all or part of their IT infrastructure, and half managing IT internally. The vast majority of respondents – more than 97 percent – worked in companies with fewer than 100 employees.

Key findings from the report include the following:

• The majority of SMBs that outsource (54 percent) spend less than 5 percent of annual revenues on maintaining and upgrading IT infrastructure, while 64 percent of non-hosting companies spend more than 10 percent of revenues on IT
  

• Companies that outsource (68 percent) are much more aggressive about using IT assets to engage in e-commerce than companies that manage technology infrastructures internally (29 percent)
  

• By more than 85 percent, outsourcers report that their IT organizations play an important role in remaining competitive in their respective industries than those that do not outsource.
  

• Outsourcers suffer fewer security incidents and technical failures than their non-hosting counterparts, and they are better positioned to avoid or mitigate downtime risks.
  

To download the complete BizTechReports.Com white paper, please visit The Planet Web site:  http://www.theplanet.com/forms/register.asp?type=SMBTTHT_WP&utm_campaign=BPHOWPRC040607.
 
About BizTech Reports

BizTechReports.Com is an independent reporting agency with offices in Washington, DC and the San Francisco Bay Area that analyzes user trends in business technology.  We explore the role that technology products and services play in the overall economy and/or in specific vertical industries.  Our Business Technology Reports are often based on Independent Field Surveys which provide a foundation for performing gap analyses that highlight the capabilities of current technology investments and compare them against emerging requirements in the market.  BizTechReport.Com sponsors include:  Microsoft, HP/Compaq, Lucent, Avaya, Unisys, Net.com and CDW.

About The Planet

The Planet is the leading provider of On Demand IT Infrastructure solutions, hosting more than 22,000 small- and medium-size businesses and 2.8 million Web sites worldwide.  By offering the best choice of servers, software tools and world-class support, backed by state-of-the-art facilities and unmatched network connectivity, The Planet helps turn information technology into a powerful competitive advantage that enables customers to successfully grow their businesses.  For additional information, visit www.theplanet.com.