European SMEs Starting to View Internet as a Business Enabler Not a Cost, IDC Says

MILAN – DECEMBER 14, 2000 – According to a recent IDC study, a growing number of the 19.3 million European small and medium enterprises (SMEs) are tapping into the Internet to conduct business and to reach new prospective customers.

 

Small and medium-sized businesses have adopted the Internet quicker than any previous new technology, said Peter Mazzi, senior research analyst with IDC’s Vertical Markets program. The falling cost of Internet access in Europe has driven an increased Internet penetration among the SMEs. Three of four companies with under 500 employees now have access to the Internet, while almost 40% have implemented their own home page.

Only a limited number of SMEs have, however, developed an integrated ebusiness strategy along the entire value-added chain. The majority of smaller firms still show a partial understanding of ecommerce potential, putting in place limited ecommerce activities, and only 10% of all SMEs have sales capabilities on their home page. Spending on ebusiness projects is higher in those sectors in which competitive pressures are higher. B2B and business trading markets opened by the large corporate markets (such as the automotive, chemicals, and energy industries) are forcing small businesses participating in the value chain to enhance their ebusiness capabilities, Mazzi said.

The majority of European SMEs are still in the wait-and-see phase of ebusiness, he added. They have put in place a basic Internet infrastructure and are still cautious, waiting for ecommerce applications to be more extensively used by the public and the development of standardized solutions. There is, however, the potential for a massive shift of SMEs from the wait-and-see phase to the me-too phase, in which the majority of these companies will follow the footsteps of the pioneers of ebusiness adoption.

Application service providers (ASPs), which allow the renting of ebusiness technologies, can drive this market as they allow smaller companies to establish an advanced ebusiness infrastructure without spending a lot on expensive custom software packages, Mazzi said. However, many small businesses prefer to implement applications internally, due to security fears or the loss of control of data. ASPs and their partners need to raise the awareness of European businesses that are unaware of the ASP concept and must demonstrate the security and flexibility of their infrastructure, advised Mazzi.

European SME IT Opportunities (IDC #M03G) provides detailed insights on the attitudes of European SMEs toward IT, and in particular the Internet. The report provides detailed insights into European SMEs’ Internet infrastructure and segmentation, IT infrastructure (hardware, networking, mobile, and applications), ASP orientation, and perceptions of IT and telecom suppliers. This report is available to purchase from your local IDC office.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business 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's customers comprise the world’s leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at emea.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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