Voice of IT TM

Spiceworks Inc., 7300 FM 2222, Bldg 3, Ste 100, Austin, TX 78730Tel: 1-512-628-8280 • Fax: 1-866-567-2744

Website: www.spiceworks.com/insightsEmail: insights@spiceworks.com

State of SMB IT 2H 2012

S e m i - A n n u a l R e p o r t O n S m a l l A n d M e d i u m B u s i n e s s Te c h n o l o g y P l a n s & Pu r c h a s e I n t e n t

Executive SummaryIn the last six months SMBs adopted tablets and cloud services in fast-growing numbers, and while IT budgets are on the rise, SMB plans to hire new staff is at a standstill.

The 4 key findings that emerged from this latest study are:

Tablet adoption keeps its momentum and nears smartphone levels. Hardware maintains the lion’s share of IT spend.For SMBs, 53% now support tablets on their network, making them almost as popular as smartphones which are supported by 59% of SMBs. Hardware continues to account for the largest share of SMB IT budgets at 40%, followed by software at 34% and IT services at 26%. Within hardware, new purchases of desktops and laptops steadied in last 6 months while tablets spiked to 38% from 30% showing a shift of dollars toward mobile.

Adoption of cloud services spikes; desktop virtualization shows strong potential.Cloud services are now used by 62% of SMBs, up from 48% in the first half of 2012. By early 2013, 73% of SMBs plan to adopt cloud services. Virtualization growth has steadied, inching upward to 65% from 64% in the first half of 2012. For the first time, this study looked into desktop virtualization showing 39% of SMBs either use or plan to use desktop virtualization technologies in the first half of 2013.

IT budgets reach highest point in last three years, while hiring freezes up. IT budgets at SMBs are on the rise in the second half of 2012. The average annual IT budget is now $162,000, up from the $152,000 reported for the first half of 2012. Only 26% of SMBs plan to hire IT staff in the second half of 2012, which is down from 31% a year ago.

BYOD still a hot topic with IT pros split on the issue.Fifty-nine percent of SMBs support a BYOD initiative, but IT pros remain split on supporting this policy. Our survey finds that 14% of SMBs fully embrace the trend, 32% note that it works well for some devices, but not for others, 24% claim it’s a headache for their IT department, and the remaining 30% have not formed an opinion. Notably, SMBs with less than 20 employees are embracing the trend with over 70% supporting BYOD.

About Spiceworks Voice of IT®

The Spiceworks Voice of IT market insights program publishes statistics, trends and opinions collected from global small and mid-size business technology professionals. More than 500,000 IT professionals in more than 100 countries have joined the program to share information and feedback on the technology issues important to them.

To receive updates on future research, follow Spiceworks Voice of IT on Twitter at @VoiceOfIT.

Sign up for Spiceworks Voice of IT research e-mails at http://www.spiceworks.com/voice-of-it.

To learn more about Spiceworks’ research programs and services, contact insights@spiceworks.com.

I N T H I S R E P O R TExecutive Summary 2

Budgets continue to climb while hiring takes a dive

3

Where the $$ are headed 4

Tablets grab more hardware dollars 5

Safety first 6

Upgrades and renewals get majority of IT services spend

7

Promising forecast for the Cloud 8

Mid-size businesses float to the head of the pack

9

Virtualization holds steady 10

Virtualization: a pretty big deal 11

Desktops virtualized across the board 12

Smaller is getting bigger 13

BYOD: a small to mid-sized trend 14

Apples vs. Androids 15

Background & Methodology 16

3

2H 2009

$108

22%

$117

20%

1H 2010

$122

20%

2H 2010

$132

31%

1H 2011

$143

31%

2H 2011

$152

30%

1H 2012

$162*

26%

2H 2012

% Adding Sta�Planned Budgets

Average Per Employee Spend on Technology

Average Planned Budget

2H 2011 1H 2012 2H 2012< 20 20 – 99 100 – 249 250+

57%

31%

8%

4% 4% 4%

10% 9%

56%

30%

61%

26%Adding Sta�

Reducing Sta�

Staying the Same

Do not know$0.7

$420

$1.2

$216

$1.6$96$1.9$19

A v e r a g e P l a n n e d B u d g e t s a n d P e r c e n t A d d i n g S t a f f O v e r T i m eBudgets shown in thousands of dollars.

Budgets shown in thousands of dollars.S t a f f i n g P l a n s O v e r T i m e

2 H 2 0 1 2 A v e r a g e P l a n n e d B u d g e t s b y E m p l o y e e S i z e

Budgets continue to climb while hiring takes a dive.

Budgets are on the rise, up to an average of $162,000*, which is $10,000 more than planned tech budgets for 1H 2012. However, for the next 6 months, more folks aim to hold staff steady than the previous 6 months, which reflects a decrease in the percentage of respondents who plan to hire in the coming half year. By employee size, smaller companies are spending more on technology per employee than larger organizations with companies with less than 20 employees spending $1,900 on average per employee vs. $700 per employee for companies with 250 or more employees.

* Making IT better:

The method for calculating Average Planned Budget got a much-needed improvement in this release. Previously participants responded to this question by selecting the range their budget fell into with the cap being $500,000 and above. We altered the methodology for this period to allow respondents the ability to input their actual budget or select a range. This important tweak allows us to better account for mid-size companies in our average.

4

Where the $$ are headed.

Hardware still appears to be getting the lion’s share of tech budgets. Allocations remained the same as last period with hardware continuing to take a larger portion of budgets (40%) than software (34%) and IT services (26%).

1H 2012 2H 20122H 20111H 20112H 20101H 2010

Hardware Software IT Services

47%42%

40% 40% 40%41%

19%23%

26% 26% 26%26%

34% 35% 34% 34% 34%33%

Creating a budget has always been a balancing

act between what the business needs and what the business can afford.

Tyler DurdenSpiceworks User

community.spiceworks.com

F R O M T H E CO M M U N I T Y

A l l o c a t i o n o f A n n u a l I T B u d g e t O v e r T i m e

5

1H 2012 2H 20122H 20111H 20112H 20101H 2010

47% 42% 40% 40% 40%41%

Desktop Computer

Laptop/Notebook Computer

Monitors/Digital Signage

Server

Tablet Computer

2H 2011

53%

55%

n/a

44%

30%

63%

60%

n/a

42%

30%

64%

63%

48%

45%

38%

1H 2012 2H 2012

PURCHASINGNEW HARDWARE87%

Desktop Computer

Server

Laptop/Notebook Computer

Storage/SAN/NAS

Wireless Networking

2H 2011

27%

29%

20%

22%

20%

30%

28%

21%

20%

22%

35%

29%

22%

21%

21%

1H 2012 2H 2012

UPGRADEIN THE NEXT 6 MONTHSIN THE NEXT 6 MONTHS

58%

A l l o c a t i o n o f B u d g e t f o r H a r d w a r e P u r c h a s e P l a n s O v e r T i m e

Tablets grab more hardware dollars.

The vast majority (87%) of respondents plan to make a new hardware purchase in 2H 2012. Over time, new purchases of desktops and laptops have begun to plateau while tablets show a spike growing from 30% to 38% in the last period. This suggests dollars are on the go as they shift toward mobile. Nearly 60% of respondents will upgrade hardware in 2H 2012 and it looks like desktop upgrades will get a boost while other hardware upgrades stay level.

To p N e w H a r d w a r e P u r c h a s e s O v e r T i m e

To p H a r d w a r e U p g r a d e s O v e r T i m e

6

1H 2012 2H 20122H 20111H 20112H 20101H 2010

34% 35% 34% 34% 34%33%

Backup/Recovery

Virtualization

Productivity Suite

Anti-Virus/Anti-Spam

Email Client

2H 2011

16%

18%

12%

12%

9%

14%

14%

10%

9%

9%

20%

17%

12%

12%

8%

1H 2012 2H 2012

Anti-Virus/Anti-Spam

Email Client

Productivity Suite

Backup/Recovery

Database

2H 2011

54%

37%

35%

37%

33%

52%

35%

34%

39%

32%

54%

39%

39%

38%

34%

1H 2012 2H 2012

PURCHASINGNEW SOFTWARE48%

IN THE NEXT 6 MONTHSUPGRADE/RENEW

IN THE NEXT 6 MONTHS

75%

A l l o c a t i o n o f B u d g e t f o r S o f t w a r e P u r c h a s e P l a n s O v e r T i m e

Safety first.

Three quarters of respondents plan to upgrade or renew software in 2H 2012 and security is the top focus with over half planning to renew or upgrade anti-virus/anti-spam software. Nearly half of respondents will make a new software purchase in 2H 2012 and backup/recovery and virtualization software lead the pack.

To p N e w S o f t w a r e P u r c h a s e s O v e r T i m e

To p S o f t w a r e U p g r a d e s / R e n e w a l sO v e r T i m e

7

1H 2012 2H 20122H 20111H 20112H 20101H 2010

19%23%

26% 26% 26%26%

Hosted Backup/Recovery

Hosted Data Storage

Email Hosting

VoIP

Web Hosting

ISP

2H 2011

8%

8%

7%

7%

9%

8%

11%

7%

8%

8%

7%

5%

13%

9%

8%

8%

7%

7%

1H 2012 2H 2012

Web Hosting

Domain

ISP

Email Hosting

Hosted Backup/Recovery

Hosted Anti-Virus/Anti-Spam

2H 2011

41%

38%

37%

26%

17%

19%

48%

38%

38%

27%

16%

18%

45%

42%

41%

28%

17%

16%

1H 2012 2H 2012

VoIPVoIPPURCHASINGNEW SERVICES36%

IN THE NEXT 6 MONTHSUPGRADE/RENEW

IN THE NEXT 6 MONTHS

64%

A l l o c a t i o n o f B u d g e t f o r I T S e r v i c e P u r c h a s e P l a n s O v e r T i m e

Upgrades and renewals get majority of IT services spend.

Sixty-four percent of SMBs plan to upgrade or renew IT services in 2H 2012. Though slightly down since 1H 2012, web hosting remains the top service SMBs are upgrading and renewing, followed by domain and ISP services. Thirty-six percent of SMBs will purchase new IT services in 2H 2012 and the top spots go to hosted backup/recovery and hosted data storage.

To p N e w I T S e r v i c e P u r c h a s e s O v e r T i m e

To p I T S e r v i c e U p g r a d e s / R e n e w a l sO v e r T i m e

8

2H 2012 1H 20131H 20122H 20111H 20112H 2010

14%28%

46% 48%

62%Planned Usage (in next 6 months)Current Usage

73%C l o u d A d o p t i o n O v e r T i m e

Promising forecast for the Cloud.

Cloud adoption underwent a big boost over the last 6 months growing from 48% to 62% currently using cloud-based services. Another 11% plan to start using cloud services in the next 6 months.

I think the endgame, however, is that the cloud isn’t about technology at

all. It’s about business. The technology will adapt to

serve whatever the business requires.

Jim6fusionSpiceworks User

community.spiceworks.com

F R O M T H E CO M M U N I T Y

9

C l o u d A d o p t i o n O v e r T i m e b y E m p l o y e e S i z e

Mid-size businesses float to the head of the pack.

By company size, it looks as if larger companies are starting to catch up, but mid-size companies are the ones moving ahead with cloud services and show the highest level of adoption of cloud services for 2H 2012.

A panorama of the cloud: The top 5 cloud-based services being adopted continue to be web hosting, email hosting, data backup/recovery, application hosting and content filtering. The top three services respondents plan to add in the next six months are data backup/recovery (17%), application hosting (14%), and data storage (12%).

To p C l o u d - b a s e d S e r v i c e s A d o p t e d O v e r T i m e

Web Hosting

Email Hosting

Data Backup/Recovery

Application Hosting

Content Filtering

Data Storage

2H 2011 1H 2012 2H 2012Planned 1H 2013

48%30%23%24%20%16%

49%32%25%23%24%19%

60%39%27%26%23%20%

68%48%44%39%30%32%

Less than 20 employees

1H 2012 55%

58%

76%

2H 2012 20-99

1H 2013

100-249 employees

1H 2012 48%

63%

72%

2H 2012

1H 2013

250+ employees

1H 2012 42%

60%

67%

2H 2012

1H 2013

20-99 employees

1H 2012 48%

67%

77%

2H 2012

1H 2013

100-249 250+< 20

Less than 20 employees

1H 2012 55%

59%

73%

2H 2012

1H 2013

100-249 employees

1H 2012 48%

64%

73%

2H 2012

1H 2013

250+ employees

1H 2012 42%

60%

66%

2H 2012

1H 2013

20-99 employees

1H 2012 48%

66%

77%

2H 2012

1H 2013

VENDOR SCORE

39 MPG56%

Are you a Cloud Vendor?

See how you stack up vs. the competition with the Spiceworks Dashboard

Sign up FREE at www.spiceworks.com/marketing/dashboard/

10

Virtualization holds steady.

Virtualization remains important to SMBs as the number of respondents who’ve adopted server virtualization inches closer to two-thirds. Fourteen percent plan to adopt server virtualization in the next 6 months, marking what could be a significant jump in adoption for 1H 2013.

2H 2012 1H 20131H 20122H 20111H 20112H 20101H 2010

44%52% 54%

61%64% 65%

79%Planned Usage (in next 6 months)Current Usage

A d o p t i o n o f V i r t u a l i z a t i o n O v e r T i m e

Flexibility is what made me realize what virtualization is. It made me realize that

servers were no longer tied to those large pieces of

hardware.

Derek_ASpiceworks User

community.spiceworks.com

F R O M T H E CO M M U N I T Y

11

1H 2010

1H 2011

1H 2012

2H 2012

2.22.1

3.13.3

Core Applications (i.e. web servers, databases, etc.)

Common Infrastructure (i.e. DNS, DHCP, WSUS, etc.)

Active Directory/LDAP/Authentication

Email Messaging

2H 2011

48%

46%

42%

37%

54%

49%

44%

38%

54%

52%

48%

40%

1H 2012 2H 2012

Less than 20 employees

1H 2012 45%

43%

60%

2H 2012

1H 2013

100-249 employees

1H 2012 70%

73%

84%

2H 2012

1H 2013

250+ employees

1H 2012 78%

76%

87%

2H 2012

1H 2013

20-99 employees

1H 2012 64%

63%

79%

2H 2012

1H 2013

To p A p p l i c a t i o n s V i r t u a l i z e d O v e r T i m eA v e r a g e N u m b e r o f A p p l i c a t i o n C a t e g o r i e s V i r t u a l i z e d O v e r T i m e

Virtualization: a pretty big deal.

By employee size, larger companies are virtualizing more than smaller companies. Over three quarters of companies with more than 250 employees are currently virtualizing servers vs. only 43% of companies with less than 20 employees.

More than 50% of SMBs are currently virtualizing core applications and common infrastructure applications. Of those currently virtualizing, there continues to be an increase in the number of applications virtualized with the average growing to 3.3 apps virtualized per SMB. The takeaway: Businesses who start virtualizing will most likely grow virtualization deeper into their companies over time.

S e r v e r V i r t u a l i z a t i o n A d o p t i o n b y E m p l o y e e S i z e

12

Desktops virtualized across the board.

For the first time, we asked respondents if they’re implementing desktop virtualization solutions. Nearly a quarter of respondents have already adopted this solution and 16% are looking into adopting desktop virtualization in the next 6 months. Employee size doesn’t seem to be a factor for desktop virtualization with the smallest and the largest companies leading the way, both with 26% currently virtualizing their desktops.

23%

16%58%

3% Less than 20 employees

Yes

No, but I plan to start using it within the next 6 months

No, and I have no plans to do so within the next 6 months

Not sure

20-99 employees

100-249 employees 250+ employees

Yes

No, but I plan to start using it within the next 6 months

No, and I have no plans to do so within the next 6 months

Not sure

26%

14%52%

8%

23%

17%59%

1%

26%

15%56%

3%

20%

16%63%

1%

D e s k t o p V i r t u a l i z a t i o n A d o p t i o n D e s k t o p V i r t u a l i z a t i o n A d o p t i o n b y C o m p a n y S i z e O v e r T i m e

You’ll notice that you will have more control over

your environment with VDI, patching is much easier,

and overall I think it’s reduced our headaches and

our costs.

Scott696dSpiceworks User

community.spiceworks.com

F R O M T H E CO M M U N I T Y

13

2H 2012 1H 20131H 20122H 2011

45%53%

Planned Usage (in next 6 months)Current Usage

Yes No, and I have no plans to do so within the next 6 months

No, but plan to implement in the next 6 months

Not sure

65%

33%

Less than 20 employees

2H 2011 31%

40%

48%

1H 2012

2H 2012

100-249 employees

2H 2011 39%

48%

57%

1H 2012

2H 2012

250+ employees

2H 2011 36%

53%

62%

1H 2012

2H 2012

20-99 employees

2H 2011 26%

40%

49%

1H 2012

2H 2012

59%27%

2%

12%

Smaller is getting bigger.

Mobile is moving on up. Tablets continue to grow in SMBs and in the last 6 months, adoption has tipped to over half (53%) of SMBs supporting tablets on their networks. The number of companies supporting tablets (53%) is on the verge of reaching the 59% of companies who manage smartphones on their networks. Larger organizations are driving this trend towards more tablets in the workplace, but smaller companies (<100 employees) are close behind with almost half using tablets on their networks today.

A d o p t i o n o f Ta b l e t s O v e r T i m e

A d o p t i o n o f Ta b l e t s O v e r T i m e b y C o m p a n y S i z e

A d o p t i o n o f S m a r t p h o n e s

14

59% SUPPORT BYOD

Less than 20 employees

71% SUPPORT BYOD20-99 employees

60% SUPPORT BYODCOMPUTERS65% 61%

73%

TABLETSSMARTPHONES

COMPUTERS41% 62%

84%

TABLETSSMARTPHONES

100-249 employees

53% SUPPORT BYOD250+ employees

50% SUPPORT BYODCOMPUTERS

33%67%

87%

TABLETSSMARTPHONES

COMPUTERS

30%62%

84%TABLETSSMARTPHONES

12%Fully embrace this trend since is the future

Works well for some devices, not so well for others

It’s a headache for our department

Haven’t formed an opinion yet

14%32%24%30%Computers

44%

Tablets

62%

Smartphones

81%

BYOD: a small to mid-sized trend.

Fifty-nine percent of organizations support BYOD, though the trend is more likely to be accepted in smaller companies. Of the companies offering BYOD to their employees, the devices most often supported are smartphones (81%) followed by tablets (62%). In other words, bring IT.

Nearly a third believe BYOD works well for some devices and not for others. Only 14% fully embrace the trend, which is most likely driven by smaller companies where 71% (>20 employees) currently support BYOD.

B Y O D P e n e t r a t i o n i n S M B ’s

D e v i c e s S u p p o r t e d b y S M B ’s O f f e r i n g B Y O D

A t t i t u d e s To w a r d M a n a g i n g B Y O D D e v i c e s

D e v i c e s S u p p o r t e d b y S M B ’s O f f e r i n g B Y O D b y C o m p a n y S i z e

With the launch of the original iPad and the swarm

of tablets that followed coupled with the huge

increase in smartphone usage by the average

person, more and more devices are getting into

the hands of users, which translates into bigger

headaches for IT.

Scott696dSpiceworks User

community.spiceworks.com

F R O M T H E CO M M U N I T Y

15

Apple iOS

Android

Blackberry

Windows 7

Symbian

75%86%

74%88%

20%26%

45%40%

7%8%

Apple iOS

Android

Windows 7

Blackberry

Windows XP

Google Chrome

Company-Issued

BYOD Supported

85%87%

59%79%

23%34%

11%20%

9%14%

5%11%

Apples vs. Androids

The top mobile operating systems supported by companies either through company-issued devices or BYOD are Apple iOS and Android.

For tablets Apple is the brand most likely to be company-issued with 85% of companies supporting iPad. A far second is Android at 59%. Through BYOD Android gains more penetration with 79% of SMBs supporting Android through this initiative.

For smartphones, penetration of Apple iOS and Android is fairly even whether it is coming through a company-issued or a BYOD policy.

Ta b l e t S u p p o r t e d O SC o m p a n y I s s u e d v s B Y O D

S m a r t p h o n e S u p p o r t e d O SC o m p a n y - I s s u e d v s . B Y O D

Background & Methodology

The State of SMB IT Report is a semi-annual study released by Spiceworks Voice of IT® market insights program, which publishes stats, trends and opinions collected from small and medium business technology professionals who are among the more than 2.2 Million users of Spiceworks.

The 2H 2012 State of SMB IT is the seventh edition of this study which is designed to keep an active pulse on the happenings of small and medium business IT professionals and IT departments. Responses to this latest survey were collected from 1,356 IT professionals around the world in companies with less than 1,000 employees.

Copyright Notice

The contents in this report are a result of primary research performed by Spiceworks. Unless otherwise noted, the entire contents distributed as part of this report are copyrighted by Spiceworks. As such any information made available by any means in this report may not be copied, reproduced, duplicated, published, displayed, transmitted, distributed, given, sold, traded, resold, marketed, offered for sale, modified to create derivative works or otherwise exploited for valuable consideration without prior written consent by Spiceworks.

This report contains information of fact relating to parties other than Spiceworks. Although the information have been obtained from, and are based on sources that Spiceworks believes to be reliable, Spiceworks does not guarantee the accuracy, and any such information might be incomplete or condensed. Any estimates included in this report constitute Spiceworks’ judgment as of the date of compilation, and are subject to change without notice. This report is for information purposes only. All responsibility for any interpretations or actions based on the information or commentary contained within this report lie solely with the recipient.

All rights reserved. 2012.

Spiceworks Inc., 7300 FM 2222, Bldg 3, Ste 100, Austin, TX 78730Tel: 1-512-628-8280 • Fax: 1-866-567-2744

Website: www.spiceworks.com/insightsEmail: insights@spiceworks.com

About Spiceworks

Spiceworks™, the world’s largest social business platform for IT, connects 2.2 million IT professionals with more than 1,300 technology brands. By combining a Facebook-like community with free IT management software, Spiceworks helps businesses to discover, buy and manage $405 billion worth of technology products and services each year.

For more information visit:http://spiceworks.com/

Want to use data from this report? Go to www.spiceworks.com/voice-of-it/termsPublished on November 14, 2012

ManufacturingIT Service ProviderEducationHealthcareNon Pro�t

14%11%

8%7%7%

GovernmentFinanceRetailOther

6%6%5%

36%

North America

EMEA

Asia-Paci�c

Latin America

Less than 20 employees

20-99 employees

100-249 employees

250 or more employees

20%

17%

28%

35%62%23%

12%3%

Employee Size Region

Industr y

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