Small businesses in the US are growing at twice the rate of large enterprises but they are wary of investing in IT, a pattern that analysts expect to be repeated in Europe.
When IBM and the US Chamber of Commerce commissioned a survey of more than 1,000 companies by Yankelovich Partners, they found that small businesses are doubtful about IT's return on investment, and many are very confused about technology acquisitions. Notwithstanding their reluctance, organisations employing less than 500 staff accounted for over $44 billion in IT spend during 1997.
Yankelovich says that 23 million small businesses in the US make up over half of the private sector's output. They employ just under half of the workforce, but many still depend on ad hoc IT advice from friends and colleagues, despite high profile marketing campaigns from IBM, Compaq, Dell and HP targeted at their sector.
Forty seven per cent of companies surveyed said they were pro-technology, but unsurprisingly, over 61 per cent wait until technology is well proven before investing in it. 70 per cent of firms are using the Internet, but attitudes are mixed, with 46 per cent of those with Web sites claiming they are worth the time and effort, 37 per cent uncertain and 17 per cent saying they are a waste of time.
With only 25 per cent of respondents using a Web site at all and the same proportion claiming familiarity with ecommerce, vendors seem to face an uphill task to convince this lucrative sector that IT can provide competitive edge.
"I don't think the pattern would be very different in Europe," commented analyst at IDC. "All the vendors are after the SMEs but they lack good advice and are nervous of major investments."
IBM's immediate response was to join forces with the US Chamber of Commerce and Small Business Administration (SBA), launching a public-private sector initiative promoting IT to small businesses.
The Small Office Solutions (SOS) Initiative is a nationwide effort to educate business on the benefits of technology. The programme includes 'Small Business Think Centers' operating at local chambers of commerce; a Small Business Information Toolkit; a Web site providing information and advice on technology needs; and toll-free help lines and information videos.
SBA administrator Aida Alvarez said: "It's no coincidence that this year's Small Business Week theme is 'Small Business: Success Through Technology'. We live in an increasingly technology driven economy and small businesses must take advantage of technology to compete across the country and around the globe."
John Thompson, general manager for IBM north America, said the small and medium business sector "is the fastest growing segment of the market ... [they] sent up an SOS when they told us they are often confused by technology."
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