World Wide Worx | Business Technology Research South Africa

IT having major impact on SMEs

Investment in information technology is having a major impact on the competitiveness of small and medium businesses in South Africa.This is the central finding of the SME Survey 2003, the largest survey ever conducted on IT investment by small and medium enterprises in this country. The findings were released this week by World Wide Worx, which interviewed more than 5900 companies on their investment in IT, impact of this investment, factors influencing purchases, and their use of financial and business services.

The scale of the project was made possible by the sponsorship of HP, Absa and PricewaterhouseCoopers, all of whom have identified the SME sector as an essential target market for large corporations. The interviews were conducted through a call centre managed by Netsurit, which provides IT outsourcing to SMEs, and partners World Wide Worx in SME research.

Among the key findings of the survey was that SMEs are spending a higher proportion of their turnover on IT each year. In 2001, 47% of SMEs spent more than 1% of turnover on IT, in 2002 48%, and in 2003 49% expect to spend more than 1% of their turnover on IT.

“This bears out the prevailing sentiment that SMEs represent a growth market for the IT sector even as large corporations are cutting back,” says Arthur Goldstuck, MD of World Wide Worx and principal researcher on the project.

Overall, investment in IT remains remarkably stable for the SME sector as a whole from 2001 to 2003. This differs within sub-sectors, which will be fully analysed in the final report, to be available at the end of June.

A notable finding of the SME Survey 2003 was that the SME sector is generally satisfied or very satisfied with its various service providers, ranging from IT providers and ISPs to banks and business advisory or accounting services.

The core of the research project, measuring the impact of IT on the competitiveness of SMEs, examined four key components of competitiveness, namely:

Cost reduction, which is in turn a measure of organisational efficiency and financial controls; Turnover; Ability to retain existing clients and win new clients, which is in turn a reflection of SMEs’ ability to grow market share; Profitability.The survey examined these four areas both in terms of perceived impact of past investment, and expected impact of future investment in IT. The overall findings were that SMEs were relatively neutral on the impact of past investment, but exceptionally positive on the expected impact of future investment. It is significant that negative sentiment is low for both past and future investment. These findings are generally similar to the findings for the other measures of competitiveness, except for the impact of IT on turnover, where a greater proportion of respondents are negative and neutral on the impact of both past and future investment. All four measures of competitiveness are fully analysed according to size of companies responding, number of computers in use, and level of investment in IT, in the report. Content includes: Number of employees per company Number of computers per company Number of computers per size of company Decision makers surveyed Percentage turnover spent on IT, 2001, 2002, 2003 Percentage to be spent on IT in 2003 according to industry Sectors reporting highest proportionate spending on IT for 2003 Sectors reporting lowest proportionate spending on IT for 2003 Primary Purchase Source Primary Purchase Source by Size of Company Primary Purchase Source by Industry Ranking of IT spending categories IT Brand Preference Industries and connectivity Industries with highest level of 56K dial-up usage Industries with highest level of ISDN penetration Industries with highest level of leased line penetration Banks used by SMEs Banks’ market share by company size Online banks used by SMEs Connectivity by banking and online banking users Banks by industry Importance of Banking products Internet Service Provider Rating IT Support Rating Banking Services Provider Rating Online Banking Provider Rating Key Factors in making an IT Purchase Decision Ranking of factors Key factors per size of company Key factors per industry Impact of IT Investment on Reduction of Cost Impact of IT Investment on Turnover Impact of IT Investment on Ability to retain/win clients Impact of IT Investment on Profitability Impact of IT by Industry Sector Impact of IT by company size It’s Easy To Order This Report This report is available in PDF format at a cost of R8400 excluding VAT. Complete the online order form or call Steven Ambrose on 083 6010333 for any sales queries