Small Businesses Focus On PCs, Networking As Outlook Brightens: Page 2 of 3

For instance, 48% of small businesses plan to increase technology spending this year vs. last year. But there's less than a resounding indicator that the spending floodgates will open. Another 39% say they'll spend roughly the same as last year, while 13% say they'll spend less. Among those firms that will spend more than last year:

• 24% say their tech outlays will grow from 1% to 10% year over year
• another 25% say their spending will go up more than 11%

On the flip side of the spending equation:

• about 7% of respondents say they'll spend up to 10% less than last year
• another 7% say they'll cut spending by 11% or more vs. one year ago.

Some smaller companies seem intent on making up for their lack of size with aggressive spending on technology. Nearly 50% of survey respondents say they'll spend 11% or more of their revenue on technology; 15% say they'll spend more than a quarter of their revenue on technology. Such numbers would be unprecedented in larger businesses.

The conservative approach toward tech spending that has dominated in recent years applies to smaller companies as well. In our survey, the top business objective for companies in making tech decisions is reducing internal costs to do business and improving profitability, an option chosen by just over 23% of respondents. That's been a major driver of technology strategy in businesses of all sizes for at least the last three years. Taking a more forward-looking approach, just under 23% of firms say they are looking to innovate with new products and new ways of serving their customers.

Among the biggest concerns or barriers to tech spending among sub-100-employee companies:

• Lack of revenue growth in recent years, cited by 21%
• Continued uncertainty in the economy, 20%
• Concerns about whether technology will perform as promised, 20%

Asked to characterize their company's mindset toward investing in technology, given factors such as the economy, the highest percent, 43%, describe themselves as "somewhat confident" while another 19% say they're "not as confident as they'd like to be." That's nowhere near the skepticism that prevailed toward technology investment in the last couple years, but it's also not nearly as bullish as the go-go late 90s.