SMBs under-invest in ICT: ITAC report

Owners of small- and medium-sized businesses (SMBs) value information and communication technology (ICT) but their don't put their money where their collective mouth is. A new study by IDC Canada for the Information Technology Association of Canada (ITAC) shows that SMBs underinvest in ICT in favour of staff acquisition and retention and non-ICT operating expenses and capital investments.

The report conclusions on SMB investment priorities are viewed "troubling" since ICT is recognized as a powerful driver of productivity and growth at the enterprise level. The study of 300 firms with between 20 and 300 employees shows that SMBs expect to spend a total of $16.5 billion on IT hardware, software and external services in 2006.

Staffing issues may be the primary reason why SMBs don't plan to invest more in ICT. When asked to identify barriers to ICT adoption, 50% cited lack of staffing as the most significant and 20% reported they have no internal ICT staff at all. The survey also found that 50% of Canadian SMBS have two or less full-time equivalent ICT employees on staff.

It's clear that SMBs understand the value of ICT to business success, with 82% agreeing that ICT is a critical factor. In addition, 77% of senior executives agree that ICT investments will "significantly improve productivity" over the next five years, while 65% say those investments have produced the expected return on investment.

Key areas of frustration over ICT usage are escalating costs (usually firms with less than 100 employees) and insufficient staff training and support (firms with more than 100 employees).

The report found that primary ICT consumption drivers were internal to the firm (revenue/profit, need to improve productivity and efficiency). Secondary drivers were most likely external to the firm, including competitive pressures or the need to gain competitive advantage.

The IDC-ITAC report was sponsored by Aliant, Bell Canada, CA Canada, Hewlett Packard Canada, Intel of Canada, IBM Canada, Microsoft Canada, Research in Motion, Rogers Communications, Softchoice and Telus.

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