April 2004--Small and medium size businesses plan to increase their IT spending this year by 6.6% over 2003, according to a recent study by Forrester Research Inc. Comparatively, large companies only plan to increase spending by 1.7% in 2004.

Optimism for the future of their businesses is a main reason for the increase in spending. Eighty-one percent describe the current business climate as moderately strong while 78% expect conditions to improve as the year progresses.

Forrester surveyed more than 1,000 IT decision makers in North American SMBs for the study. An SMB is typically defined as a firm with fewer than 1,000 employees. Of those firms, the most optimistic industry seemed to be Manufacturing, with 86% expecting their industry's performance to improve slightly three quarters from now.

According the survey, all of the optimism will translate into increased IT spending, primarily on hardware, security, and information management software. Over the next 12 months, 75% of SMBs plan security purchases and 74% plan to buy new servers. Small and medium businesses have also caught the wireless bug, with 51% already experimenting with wireless networking and 70% planning to purchase added Internet connectivity and bandwidth. Of those purchasing new Internet features, 85% will buy new networking hardware.

Another area where SMBs are seeking upgrades is in their PCs. Sixty-one percent have upgraded to Windows XP. Ninety-five percent expect to replace an average of one in four PCs this year. Vendors who will win the new purchases include Dell, who 79% of SMBs cited as a preferred PC vendor; Microsoft; Cisco; and Symantec, whose security products were preferred by 55% of the SMBs surveyed.