SMBS in the U.K. to Spend US$2.2B on Storage & Security in 2007

Small and medium businesses (commercial companies with up to 999 employees) in the U.K. are on track to spend up to US$2.2 billion on data storage and IT security this year, up some 15% over last year. Of this amount, the bulk of the spending of US$1.47 billion will be on data storage with the rest going towards beefing up their IT security needs, according to the latest report by New York-based Access Markets International (AMI) Partners Inc.

In the data security space, small businesses (up to 99 employees) in the U.K. are primarily spending their IT security budgets on anti-virus products and services. On the other hand, medium-sized companies (100 – 999 employees) are allocating funds to security services providers. MBs in the U.K. spent about US$187 million in outsourced IT security spending last year, with approximately 50% of that going to third party vendors.

Small businesses in the U.K. seem to be spending their storage budgets on hardware devices, principally for Desktop PC backup. Conversely, medium-sized companies are distributing funds to managed services in support of their data storage requirements. Although, inadequate protection from disasters or malicious attacks does adversely affect business productivity, hard drive failure is the leading cause of data loss among U.K. SMBs. On average, SBs in the U.K. incurred a cost of US$2,363 to recover from breaches or restore lost information, while the cost for MBs was higher at US$7,967, according to AMI studies.

“The need for business continuity has become more widespread, thereby pushing SMBs to protect their IT assets,” says Jacqueline Atkinson, New York-based analyst at AMI. “As a result of the onslaught of security breaches, data losses and mandated industry regulations - particularly in the finance and healthcare sectors - IT security and storage will continue to be high growth markets within the SMB space.”

The fear of malware and other online threats is the key reason for the vast majority of SMBs in the U.K. focusing on data security. However, in the data storage space, the leading investment driver is legal compliance for SBs, and expanding IT networks for MBs. “U.K.-based MBs continue to spend substantially on services for IT storage,” Ms Atkinson says. “However, SBs in the U.K. spend more on hardware solutions. Last year they apportioned 74% of their total storage spending to PC and server equipment.”

SMBs that have invested in a server are disbursing more on existing storage hardware. “One in three UK MBs told AMI that they are planning for direct attached storage (DAS) and network attached storage (NAS) systems,” Ms Atkinson says. “PC storage is moving away from external drives to online or offsite data backup or disaster recovery, which is a pragmatic approach for SMBs to safeguard business critical data.