Good Communication Is the Key to Lucrative European SME Market, IDC Says

LONDON, MARCH 6, 2000 — According to the latest analysis from IDC's European Vertical Markets program, around 12 million of Europe's 19 million small and medium-sized enterprises (SMEs — less than 500 employees) use IT to some degree. With most planning on investing increasing proportions of their budgets on IT products, the European SMEs represent a sector that cannot be overlooked by IT suppliers.

"Traditionally, smaller companies were presumed to have a negative attitude toward IT adoption," said Peter Mazzi, analyst for IDC's European Vertical Markets program. "A growing number of SMEs, however, have already reached an advanced IT infrastructure or are gearing up to invest even more in it – these companies are, and will continue to be, an important target for IT vendors. Even the vast majority of companies who currently have little interest in applying IT innovation at their organizations represent an opportunity for the future as market trends force them into greater IT adoption."

Despite the growing number of European SMEs involved in IT innovation, such as the Internet pure plays, the majority of small businesses are slow in adopting the major new technologies. "IT suppliers must invest in communication to increase awareness and their visibility in this potentially lucrative market," Mazzi advised. "With Internet penetration among European SMEs on the rise, the implementation of marketing strategies and direct selling through the Web are likely to become commonly used by suppliers."

Selected Findings

— Internet: Two of three European SMEs have access to the Internet, but only half have developed their own home page. Banks have a higher penetration of Internet access and home page presence than average.

— eCommerce: Web sites able to carry out transactions online are present at some 6.6% of the whole SME population.

— Intranet/extranet: Only 17% of respondents have already developed an intranet. Extranet penetration is even lower (only approximately 7%). Nearly 15% of all European SMEs are planning to implement an intranet or extranet.

— IT applications: Almost 6% of European SMEs have developed a knowledge management structure, 15% have implemented data warehousing, but the penetration of enterprise resource planning (ERP) is low among European SMEs and is directly proportional to company size.

— IS Budget Index: The IS Budget Index (IS Budget/number of employees) is highest among banks, followed by insurance companies and government; low levels are found in the health care sector.

— LAN: About 50% of respondents have a LAN infrastructure, with 10% planning to invest — either in implementing or migrating to a new system. Larger companies, banking, and countries such as France and Denmark/Sweden have high LAN penetration. Microsoft NT is the most common LAN operating system, followed by Novell NetWare.

Note: These findings refer to the 12 million SMEs currently using IT.

IDC's new report, European Small and Medium-Sized Enterprises' IT Opportunities (IDC #M03FB), provides detailed insights on European SMEs' attitude toward IT, and in particular the Internet; their hardware, software, and networking infrastructures; the present and future status of various IT applications (knowledge management, data warehousing, data marts) and IT projects (Euro, Y2K); patterns of IT expenditure and their perception of IT suppliers. This information is split by company size, vertical market, country, and presence/absence of management information systems. This report is available to purchase from your local IDC office.

About IDC

IDC delivers dependable, relevant, and high-impact data and insight on information technology to help organizations make sound business and technology decisions. IDC forecasts worldwide IT markets and technology trends and analyzes IT products and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC is committed to providing global research with local content through more than 500 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, and the financial community. Additional information can be found at http://www.idc.com.

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

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