The recession is driving small businesses to make tough choices when it comes to IT -- deferring upgrades, cutting back on outside consultants and in some cases, cutting staff.
Thanks to the recession, 2009 looks to be the year small business owners ask their IT departments to do more with less -- less revenue and less people.
At some businesses, that means foregoing hardware or software upgrades for the time being. Some small businesses are opting to cut back on staff or outside IT consultants, while others are moving software development overseas to trim costs, according to owners and IT consultants who work with them.
Waiting to upgrade
Castle Brands, the New York City fine spirits importer, is doing a variety of things to cut costs. IT Director Andre Preoteasa is putting off hardware and software upgrades that aren’t absolutely necessary. He’ll continue to make improvements to the company’s financial information systems, but will delay upgrading to Microsoft Office 2007 from Office 2003.
Preoteasa is also cutting the number of hours he’s paying an outside IT firm to monitor the company’s servers, from 10 hours a week to six. The cutback had to happen, though he’s not happy about doing it. “It’s like turning off the garage light that used to be on all night,” he says.
Joshua Konowe, founder and CEO of an online advertising network called BrandClik is making do with less staff. The Reston, Va., company hired a full-time crew of IT developers in June 2007 to build its network prototype and kept staff on afterward to maintain it. Last June the company decided it would be cheaper to provide the network on a software-as-a-service basis and had developers completely re-work the code. Once that was accomplished, however, and customers could manage their ad networks on their own, a full-time in-house IT staff wasn’t necessary anymore, so they were let go, Konowe says.
Argelys Pena, founder of Spirit Technologies Inc.,a Pembroke Pines, Fla., IT and Web developer, reduced software development costs by hiring programmers based in the Dominican Republic. Lower development costs means Pena can spend more targeting clients that haven’t been affected by the bad U.S. economy, such as attorneys, non profits and overseas governments actively investing in technology infrastructure.
Penny pinching may boost open source
The drive to curb costs could have a silver lining -- more interest on the part of small and mid-sized businesses in low-cost, open source programs that take the place of on-site software they used to pay big buck to license.
Irving Popovetsky, owner at ProStructure Consulting, a Portland, Ore., IT consultant, sees a number of his small and mid-sized business clients gravitating to Zimbra, the open source e-mail server that replaces Microsoft Exchange, and Open Office, an open-source alternative to Microsoft Office. “They love the cost savings and sometime improved functionality,” Popovetsky says.
Businesses are fed up with how often Microsoft releases upgrades -- every two to three years compared with every five years for other major software vendors -- because of the hefty licensing fees and service level agreements that come with updates, Popovetsky says.
The open-source and cloud computing movements are spilling into hardware, Popovetsky says. The year 2008 ushered in the netbook, a minimalist laptop running Linux instead of a Microsoft operating system. This year should witness the debut of the “nettop,” a desktop PC replacement that uses Linux from Ubuntu or Novell, he says. Larger companies are leading the charge into lower cost open-source desktops, but small businesses will definitely follow. “It’s usually enterprises that blaze the trails and [small and mid-sized businesses] come later,” he says.