MMR: The United Kingdom (UK) was the first to feel the ripple effect of the U.S. dot-com market decline and the downturn in the economy. Was there a drastic drop in IT spending across midsize organizations during the past year or two?

Brown: As the old adage goes ‘when the U.S. sneezes, the UK catches a cold’. Bromide aside, from 2001 to 2003, the UK witnessed a strong decline in spending on IT across the board. Most noticeably, spending to discrete projects were the first to feel the slash-and-burn effect, especially since many British CEOs witnessed so little ROI from big-ticket e-commerce and Y2K projects in the late `90s.

IT managers in the UK – especially at perennially resource-constrained midsize businesses – have had to do more with less, precisely at a time when few could least afford it. Thus spending has really been at or near historic lows over the past couple of years. Although a rebound is in the works, it will be tempered from the boom years of the late ‘90s and into 2000.

MMR: Even with these changes, have midsize businesses in the UK become the focus for many technology vendors who were never interested before?

Brown: Absolutely – midsize businesses in the UK have become a bit of a flavour-du-jour among a host of IT vendors. In the past, you could hardly get a vendor’s attention for less than a million dollars in spend, and now some CIOs of midsize businesses may find it hard to avoid them, let alone make the right technology choice for their businesses!

The reason? In the midst of the downtrend in spending amongst large market companies, vendors perceived midsize businesses to be an underserved, ‘untapped’ market. The risk, of course, is that many of these vendors will lavish attention once again on their core large-market constituents the moment spending returns to more normal levels.

MMR: Do you think this current market activity will be beneficial for midsize companies in the long run?

Brown: I think that some midsize businesses have become a bit bewildered by all of the choices they are suddenly confronted with, as well as the impact it will have on their IT organizations. For example, four years ago, very few companies had heard of offshore – at the very least, it meant a bank account, not where your mission-critical applications would be built! Thus, the natural tendency for many midsize businesses is to shrink away from the latest technology advances, and let others cut their teeth – and assume the risk – of being the first adopters.

Most midsize business lack the basic frameworks and perspective necessary to understand what all of the changes mean to their organizations in the short and long term. However, savvy midsize companies can leverage some of the current market activity – lower prices, for example – to their benefit. Other areas, like security, have quickly become an immediate necessity for survival.

MMR: In addition to security, what major business issues are midmarket IT decision-makers struggling with at this time?

Brown: IT managers at midsize businesses will increasingly search for the right metrics to increase their IT budgets. As a part of that, they’ll want to know how they compare relative to their peer group. The benefits of Windows over Linux to reduce TCO continues to be a pervasive theme – but most midsize business Linux users are still just dabbling in it. Finally, in addition to security, wireless, business intelligence, the worth of outsourcing and optimizing investments in business applications are garnering a significant amount of midsize businesses attention.

MMR: What would you recommend as the best approach to evaluating IT solutions to help resolve these business challenges?

Brown: Inertia is one of the biggest challenges that face midsize IT departments. That, and the ability to see the ‘forest through the trees’ when trying to evaluate new technology services and solutions that can bring real value to their companies. The first step is in doing a needs assessment – that is, define all the things that your organization must have to ‘keep the lights on’ and maintain the status quo, versus other, perhaps more strategic, initiatives that can drive true differentiation and competitive advantage. For example, utilizing a tactical help desk outsourcing contract can not only deliver the same services at a better price, but free up internal IT staff resources to help develop mission-critical applications.

Do you have a question for Rob Brown? E-mail him at midmarket@gartner.com, or speak with him one-on-one at Midsize Enterprise Summit Europe. Click here now to qualify to attend as our guest, or contact Kate Attia at +44 (0) 207 736 5026.