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SMEs Must Clear Costly IT Hurdle To Survive Downturn

Majority of respondents spending most on IT report real concerns about cuts and losses for 2009

Almost a third of UK SMEs find IT represents the greatest cost overhead for their business, ahead of facilities and HR. And among those respondents struggling with the overheads of managing IT, the majority also express ‘very real concerns’ about the scale of cost-cutting and losses they will see this year, suggesting companies failing to manage IT effectively may be among those worst hit by the economic environment.

Based on 1,000 responses from IT decision makers at UK SMEs, the research carried out by Vanson Bourne on behalf of salesforce.com investigated the challenging climate for small businesses and the difficulty in decision-making in the current downturn.

Overall, a quarter of UK small businesses surveyed expressed real concerns about the scale of cuts and losses for 2009, with almost one third believing the year will be classed as a success if they do not shrink as a business. Thirty-two per cent of total respondents reported IT as the highest cost overhead, correlating strongly with the 33 per cent that have real concerns about the scale of cuts and losses we may see this year.

“Small businesses right now are investing far too much in upfront costs for IT infrastructure. They also incur huge costs managing that IT when they really could be saving cash and re-investing in their business,” said Steve Garnett, chairman EMEA, salesforce.com. “Cloud computing significantly reduces the need for costly infrastructure associated with traditional, on-premise software and the additional management overheads. This is why we’re seeing an increasing number of businesses moving to cloud computing models.”

Garnett continued: “Small businesses need technology that is scalable to their needs – which is essential in these uncertain times. IT should be seen as an investment which can deliver long term efficiency and success, rather than to satisfy short term needs.”

While the majority of respondents were cautious in their outlooks, 13 per cent said they expect their business to boom in the downturn and they see the current recession as an opportunity. Among that group, 72 per cent said acquiring new customers was their number one priority as opposed to retaining or selling more to existing customers, or retrenching.

About salesforce.com

Salesforce.com is the world’s largest provider of customer relationship management (CRM) software. For more information about salesforce.com (NYSE: CRM), visit: www.salesforce.com.

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