The IT industry continues to show strong signs of growth as technology budgets, cloud services usage, virtualization adoption, and IT staffing plans among small and mid-sized businesses (SMBs) all showed their strongest gains in more than 18 months, according to a new report by Spiceworks™, Inc., the largest social business network for IT with more than 1.4 million SMB IT professionals.

These trends were uncovered in the most recent Spiceworks State of SMB IT technology survey, a global study that investigates the latest technology purchasing, usage and staffing trends among small and mid-sized businesses (<1,000 employees). The study of more than 3,000 IT professionals was conducted in January and February 2011 by the Spiceworks Voice of IT® Market Research Program. Survey highlights include:

Significant growth among budgets and staff

- IT budgets in 2011 grew eight percent when compared with IT budgets for the second half of 2010 – the largest increase in more than 18 months. The average annual IT budget for SMBs now stands at $132,000, an increase over the $121,770 previously reported for the second half of 2010.

- Nearly one in three SMBs (31 percent) plan to hire IT staff – the largest increase in the past 18 months. Smaller companies (<20 employees) remain most confident with 33 percent planning to increase IT staff compared to only 17 percent of companies with 20 employees or more. Additionally, more SMBs than ever before (15 percent) plan to add part-time staff.

Substantial growth in cloud and virtualization technology

- Cloud services are now used by 28 percent of SMBs, a 100 percent growth rate from mid-year 2010 (14 percent). By mid-2011, cloud usage among small and mid-sized businesses is expected to rise to 42 percent. In addition, more than one quarter (26 percent) of SMB IT budgets are earmarked for hosted and cloud services. This is up from the 19 percent reported this time last year, representing a 37 percent year-over-year increase.

- Almost one in three SMBs (30 percent) plan to change the way data is stored, moving more data to the cloud. In the first half of 2011, SMBs who plan to change the way they store data plan to reduce their use of local system hard drives and direct attached storage (DAS) from an average of 53 percent today to 31 percent by mid-year. Furthermore, by mid-2011, SMBs who plan to change the way they store data will triple their online/hosted/cloud storage usage from 3 to 9 percent.

- Virtualization is now a cornerstone of SMB IT initiatives with 54 percent of small and mid-sized businesses currently using virtualization and another 20 percent planning to use virtualization by mid-year 2011. Among SMBs currently using virtualization, 54 percent are putting core apps in virtual environments. For the first time, virtualization is the number one planned new software purchase among SMBs with 25 percent planning a new virtualization software purchase.

“Small businesses are responsible for half of all IT spending,” said Jay Hallberg, co-founder and vice president of Marketing for Spiceworks. “All signs point to a good year for the IT industry as SMBs around the world significantly boost investments in technology products and services as well as staffing. Additionally, the hesitation many small businesses previously had toward virtualization and cloud services appears to have dissipated, which bodes well for purveyors of these technology offerings.”