Internet is critical for targeting European SMEs, IDC Says

A recent survey conducted by IDC shows that European small and medium-sized enterprises (SMEs) have a highly receptive attitude toward Internet-based IT procurement and that half of these companies will engage in an online transaction in the next two years. Although the percentage of companies who actually purchase online is still very limited at present only 5% of SMEs with Internet access - this proportion is about to change dramatically - 49% plan to purchase products online in the next two years. By the end of 2001, a total of 55% of SMEs with Internet access will have engaged in at least one online transaction with a PC vendor, reseller, or retailer.

"These results prove the Internet has already become a critical information channel in targeting European SMEs," said Eric Izabelle, senior analyst in IDC`s European Distribution Channels Expertise Center. "Over three quarters of the companies surveyed use the Internet to compare or select PC products, and a similar proportion use the Web for purchasing software products."

The study also assessed SMEs` use of key vendors` Web sites in their PC procurement process. The results show that hardware vendors, in particular Hewlett-Packard, IBM, Compaq, and Dell, dominate the Internet scene.

Hewlett-Packard was found to be a key Internet player, with as much as 80% of the companies visiting its Web site at least once a year. Compaq, HP, and IBM had the highest level of Internet use and the highest level of appreciation from the companies surveyed. "On key criteria (quality of technical information, quality of commercial information, and quality of customer support and service), the companies surveyed rated the Web sites of these vendors well above the rest of pack," said Izabelle.

Although Dell has a high level of Internet awareness with SMEs, IDC believes Compaq, Hewlett-Packard, and IBM have an advantage both in terms of sheer traffic and user rating. "Once these three vendors start selling their products openly to SMEs on their Web sites, they should capture a significant share of the Internet action," Izabelle added.

IT vendors and channel companies will be competing for this emerging demand, and the results show IT vendors have a clear lead over the channel - 86% of the Web sites used by companies in selecting or purchasing PC products are vendors` sites, and hardware vendors` in particular. The Internet image and brand awareness of European channel companies is still very low with European SMEs. "Resellers and distributors must focus on this aspect of their strategy, or risk becoming the invisible men of e-commerce," warned Brian Pearce, program manager in IDC`s European Distribution Channels Expertise Center.

BMI-T Comment

In the largest study of its kind in South Africa, a fifth of companies with Websites were making use of firewalls for security. The next most popular form of security used was passwords. "Companies are increasingly going to have to take a long hard look at the security measures they have in place, with the volume of e-Commerce traffic picking-up", says Neil Lighfoot, Internet research analyst. "The spate of site "hackings" that we have experienced in South Africa recently throws this need into sharp relief".