SMBs to spend, spend, spend on new technology

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Investment by European small and medium-sized businesses (SMBs) in IT hardware, software, and services is set to soar between now and 2004.

Up to now, SMBs have been slow to spend on new technologies, but most products are unsuitable for SMBs and providers are adapting to cater for this massive market.

“SMBs are cautious about implementing new technologies, given their limited capacity to deal with disruption,” said analyst Peter Mazzi. “The lack of flexibility of products to match requirements and the hype surrounding the Internet have discouraged SMBs from investing.”

But according to IDC, the SMB market has the potential to be the engine that drives the IT industry in Europe, and application service providers (ASPs) have an important role to play.

IDC forecasts growth of 11.6% in spending by small companies (fewer than 99 employees) and an increase of 12.1% by medium-sized enterprises, compared with growth of 10.9% for large companies.

Heavy investment by the corporate sector (500+ employees) has so far been matched by only a small number of high-tech SMBs.

“The much-hyped ASP has yet to fulfil expectations as the driver of IT infrastructure in European SMBs. In fact, SMBs have been slower than larger enterprises to accept this delivery model because they are uncertain of its real capacity to solve their business concerns.

Once the fragmented European ASP market has consolidated, however, and issues like security and bandwidth have been resolved, this model will contribute significantly to the growth in spending by SMBs,” concluded Mazzi.

The IDC report, European SMB IT and Internet Spending Forecasts, provides insight on IT spending patterns in European SMBs, segmented by company size. This study highlights key trends affecting IT and Internet spending attitudes in the European SMB market for the forecast period 2000-2004.

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and eBusiness trends to develop sound strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC has customers among the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community.

IDC

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