SME ecommerce take-up set to soar

Small to medium sized enterprise (SME) investment in ecommerce is expected to accelerate rapidly in the next 12 months, according to a survey of 800 businesses carried out by Durlacher Research.

The latest Durlacher Quarterly Internet Report, published on 29 August, claims that 90 per cent of SMEs have an internet connection and that this level is expected to rise to 96 per cent over the next year.

The average spend per company on internet services is £18,200, with a projected rise to £21,500 over the next 12 months.

The report gives projections for 10 vertical market sectors, and the highest investment was planned in the IT, finance and retail sectors - the traditional early adopters of technology. Health and manufacturing sectors showed the lowest planned spend.

The adoption of internet technology is running at 20 per cent compound annual growth rate - one of the highest rates of adoption of any business technology.

Sarah Skinner, Durlacher's European internet analyst, said: "There has been a lot of hype about the state of the internet economy so I was quite surprised by the results of the survey."

"The average investment in ecommerce was low at £18,000, although that did not include money spent on internet service providers, telephony etc, but the next 12 months shows a significant leap in investment," she added.

Cost remains a barrier to adoption, however, and Durlacher has seen a rise in usage of the outsourced application service provider model. It also identified barriers such as a lack of board level support and a lack of training and education, both of which are leading to poor understanding of the relevance of the internet to some businesses.

The survey also found that 82 per cent of SMEs have a dial-up internet connection in the shape of a modem or ISDN connection, and that investment in 'always-on' technologies such as asymmetric digital subscriber lines is expected to increase threefold.

The unbundling of the local loop and the proliferation of unmetered access will be catalysts for an increased take-up of internet technologies by SMEs, it said.

Skinner believes the survey marks an SME-led upturn in the internet economy. "Companies are starting to realise that ecommerce is becoming a mass-market issue and they are willing to invest in it. This is significant for the development of the internet in general: it represents the start of the acceleration of internet investment and has implications for the economy as a whole," she said.