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SMB IT and E-Business Spending
eMarketer, Feb 2005, Pages: 24
Current IT Adoption and Usage Among SMBs
According to a late-2004 study that was designed to measure the outlook for 2005 among US small businesses, American Express found that small business owners were more optimistic about their company's growth prospects heading into 2005 than they had been two years before. In October 2002, 64% of respondents had indicated that they saw positive growth opportunities for the coming year, compared with 74% of respondents who said the same thing in 2004.
The survey went on to find that the percentage of businesses planning to make capital investments in the coming year had remained steady at 61% in September 2004, compared with 62% of respondents in 2003 and 56% in 2002.
American Express surveyed 773 managers or owners of small businesses in September 2004, defining small businesses as those companies with less than 100 employees.
In a separate study that was conducted on behalf of web hosting consultancy Interland, just 4% of the small businesses from its survey said that they planned to spend their profits on additional Web or technology investments, indicating that any extra money earned by SMBs in 2004 would not provide a boost to their IT spending in 2005.
Although the business climate is improving, money still appears to be somewhat tight for many small companies, as American Express found that 51% of respondents to its study said that they continue to face cash flow challenges as of late 2004. This is a slight improvement over previous years, however, when 55% admitted to having cash flow problems in 2003, and 63% reported similar problems in late 2002.
As a result of these concerns, small businesses are remaining cautious with their hiring, with just 35% of respondents to the American Express study indicating that they plan to hire more staff over the next six months, compared with 46% that had said the same thing in April 2004. Small companies that have been in business for less than three years are the most likely to do more hiring in the coming months, with 53% of respondents fitting this description saying that they would be adding staff.
When CIOs were asked to rank their top five technology priorities at the end of 2004, CIO magazine found that respondents from small, medium and large firms all ranked integration and systems enhancements as their leading IT priorities heading into 2005.
IT executives were also consistent in ranking the need to ensure data security and integrity as their second highest technology priority, while redesigning and/or rationalizing their companies' IT architecture was listed as the third most important priority among CIOs from small, medium and large businesses as well.
The only place where SMBs were found to differ from their larger counterparts is in the area of improving their e-commerce capabilities. Not surprisingly, however, many large companies are seeking to improve automation within their own supply chains.
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