Tech spending for smaller firms is set to pick up after a flat 2004, according to IDC , when the majority of IT budgets were absorbed by internal overheads such as personnel and facilities expenses.

During last year the analyst firm reported that only 20.2 per cent of total IT budgets were dedicated to new IT initiatives, leading to "moderate investments".

Companies in the insurance/other finance and retail/wholesale sectors showed the highest willingness to increase budgets in 2005. But a low percentage of government and education institutions expect to increase their budgets, IDC found.

Overall, value-added resellers are expected to be the primary source of IT products and services for SMBs in 2005, and will account for the largest share of companies' IT budgets, the analyst firm predicted.

However, IT vendors should note that small and low-end midsize companies have a preference for value-added resellers, but that larger companies consider direct sales from manufacturers or systems suppliers as their primary source of IT products.

"Western European SMBs consider technical skills to be very important and they are fairly satisfied with their suppliers' performance on this matter," said Laura Converso, senior research analyst with IDC's European SMB Markets service.

"On the other hand, they are less satisfied with the low cost of ownership, while considering it one of the three most relevant issues when choosing an IT supplier."

SMBs' familiarity with new technologies rose with the increase in company size and the sophistication of their IT needs. However, in some cases, very specialised small companies are more IT-oriented than their midsized counterparts.

The survey also investigated security adoption rates. The high penetration (95.54 per cent) of security technologies was attributed to the emergence of the internet as the main computing platform in the enterprise, which has resulted in high security demand among SMBs.

Almost 90 per cent have plans to continue investing in antivirus software. Viruses, worms, Trojans, and hacker attacks are more complex than ever, and new versions of antivirus software are constantly required.

Depending on business confidence, cash flow situation, and the availability of industry-tailored technology packages, SMBs will continue gradually to mobilise their workforces.

Overall, almost 40 per cent of western European SMBs have a mobile-working system in place, while a further 23 per cent plan to implement one in the future.

Regarding IT outsourcing, the survey results found that midsize companies are more enthusiastic than small companies when considering the adoption of an outsourcing provision model.

"One of the drivers propelling the growth of IT outsourcing is the desire to lower costs. But many SMBs still believe that outsourcing prices are high," said Converso.

This is cache, read story here