Web Hosting Services Expand, Reports IDC

FRAMINGHAM, Mass., September 15, 2004 - Small and mid-sized businesses (SMBs) are looking with increasing interest at a variety of new IT services. According to new research from IDC, firms with under 1000 employees are expanding their use of a wide variety of advanced IT services, with Web hosting and network and security consulting the most widely used. Although network-related services are the current favorites, services that enhance infrastructure capabilities are high on the list for future acquisition.

IDC's research focused on the heart of the SMB market - firms with 20-1000 employees - as well as the market sweet spot for IT services - firms with 100-999 employees. IDC also looked at larger companies for comparison and found that, despite limited resources, SMBs were actively moving forward to add new capabilities. In general, large companies currently have higher rates of usage for most IT services, but small and mid-sized companies, who are just beginning to investigate and explore the idea of purchasing IT services, have higher levels of interest and strong plans in the works.

Ray Boggs, vice president for Small/Medium Business Research at IDC noted that, "SMBs, especially those in the mid-market, with 100-999 employees, are in the awkward years of technology use: too big for the simple solutions that serve the smallest firms, but not yet ready for big ticket enterprise approaches. For these firms, access to flexible IT services can represent an affordable approach that meets their needs."

"While large companies have made more decisions about their strategies for the obtainment of IT services, medium-sized companies of between 100 and 999 employees generally show greater plans and interest in a host of IT services including having budgeted for new services. During the next five years, the share of services spending by small and medium-sized companies will grow from 22% to 28% of the market in the U.S.," stated Rebecca Segal, vice president of Worldwide Services at IDC.

For the recently completed study, Filling and Delivering IT Services to the SMB Market, IDC fielded a survey of 550 IT and business professionals to better understand their current use and future demand for a host of IT services. The goal of the special report, which was supported by IDC's Services and SMB research groups, was to assist technology and services vendors in their efforts to market, sell, and deliver IT services to the underserved SMB market.

Major research questions addressed in this study included:

What are SMBs' current usage, purchase plans, and interest levels for 22 different categories of services from applications consulting to outsourcing?

What are customers' bundling preferences for IT services?
What are customers' preferences for services providers, whether local or national?

What are the key criteria for vendor selection, and what are the key influencers on the choice of a service provider?

Which service and technology vendors have the greatest "brand awareness" in the SMB market? How does this differ from their perception by large customers?

For more information about this special study, please contact Melissa Bambauer at 508-935-4229 or mbambauer@idc.com.