Local small and medium enterprises (SMEs) are not getting desired returns on their IT investments. This is according to World Wide Worx MD Arthur Goldstuck, delivering the keynote address at the Futurex Conference in Sandton this morning.
Goldstuck presented the preliminary findings of his company`s SME Survey 2005, which focused on finding the effects and impact of technology on SMEs.
The research targeted thousands of SMEs in the local market, and found that although SME turnover is increasing, fewer than half of these companies spend even 1% of their turnover on IT.
"A lot of technologies that vendors and their partners are selling to SMEs are being sold for the sake of technology and not for the fact that they could improve a company`s efficiencies. These technologies are the likes of ERP, CRM and SCM, many small companies can get by just using applications such as Excel," he explained.
He added that the pricing of these technologies is clearly way out of the SME league, a factor that influences their investment in technology.
"SMEs are saying they would rather spend money on basic systems than on complex ones that do not show them quick returns," Goldstuck said.
He added that while large corporates can wait for some time to see return on their investments, smaller businesses do not have the luxury of waiting.
"Another interesting find that came out of the research is the fact that only about 1% of SMEs are comfortable with online purchasing," said Goldstuck. This, he added, has been compounded by the fact that locally, logistics and turnaround processes have not been streamlined.
On the communication side, Goldstuck said small companies are seeing a lot of benefits from ADSL, although the cost of such services is still a problem.
However, a lot of SMEs seem to be adopting ADSL, while at the same time those in industries such as marketing still maintain ISDN connections as a backup.
Goldstuck noted that leased-line routing is also still popular, especially with IT companies, with the software and services companies taking the lead in usage. It has proven to be a reliable form of high-speed connectivity, he added.
According to the survey, a lot of SMEs that have IT systems in place consider themselves to have a competitive advantage, whereas those that don`t, do not seem to consider themselves disadvantaged by the lack of IT systems.
However, Goldstuck said previous research has shown that SMEs with new IT systems are quick to find they were actually disadvantaged by the previous lack of IT.
The research indicates that IT can have a huge impact on SMEs, although it is not top of their agendas (being rated as less crucial than access to expertise and finances), and that smaller companies are looking for solid value propositions before implementing IT systems.
The research also found there is negative sentiment around government`s commitment to supporting SMEs.
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