Small and medium businesses (SMBs or companies with up to 999 employees) in Russia are set to spend US$5.4 billion this year to strengthen their IT infrastructure, up some 36% over 2006, with the bulk of the SMBs citing data security as their topmost concern, according to the latest study from Access Markets International (AMI) Partners, Inc.

“Almost 80% of SMBs said that protection from electronic threats is the major motivator to invest in IT security,” says Nichelle McKenzie, New York-based Analyst at AMI Partners. “In real terms that means, small businesses (SBs or companies with up to 99 employees) will spend US$16 million—and medium businesses (MBs or companies between 100 and 999 employees) will spend US$52 million— on security solutions in Russia this year.”

An increasing number of SMBs in Russia are also planning to promote employee training in IT skills and knowledge, invest in new facilities, push advertising and promotional campaigns, and work more closely with select channel partners. AMI-Partners’ survey reveals that 23% of SBs and 18% of MBs saw revenue increases in 2006, and 41% of SMBs said they saw an overall increase of over 17% in annual revenues.

The proliferation of computing products such as PCs and printers still accounts for the majority share of SMB IT investments. About 35% of SBs in Russia use PCs, mostly desktops. PCs and PDAs accounted for 75% of the 2006 total computing hardware spending which was about US$1.6 billion. Imaging, printing and peripherals made up 19% of the spending.

“Despite SBs accelerating their IT investments, almost 50% of non-PC owning SBs said that IT does not and will not play a key role in their overall business strategy;” Ms. McKenzie says. “About 40% said PCs are useful to handle simple organizational tasks. Russia SMBs are not brand-loyal; and white box or non-branded desktop PCs are the most common option for both SBs and MBs.”

Storage spending among Russian SBs grew 30% to reach US$115 million, while for MBs it rose 21% to reach US$125 million in 2006. In the security space, 93% of SMBs had some sort of anti-virus protection, and 48% had some anti-spam protection in place. “Currently, the adoption of advanced security solutions—beyond basic anti-virus, anti-spam, and anti-spyware applications—is still in the early development stage, particularly among SBs,” Ms. McKenzie says. “However, anti-spyware, web filtering, patch management, and VPNs will be the leading areas for security investments among SMBs in Russia this year.”

Future investments will also target the lack of IT support and service personnel. About 37% of Russian SBs reported having no one looking after IT service & support. Outsourcing to a third party is the most preferred option when SMBs want to have some type of technology management. “About 10% of MBs in Russia still do not have anyone looking after their IT,” Ms. McKenzie says. “Most of them are smaller MBs that are predominately in the manufacturing and wholesale verticals. These are prime areas that vendors can target to market to in 2007 and 2008.”