Small business IT spending on the up

Small business IT spending on the up

Market analyst IDC's latest small business research shows that IT spending continues to be an integral part of many small businesses' attempt to improve operational efficiency, as well as their ability to service existing clients and capture new ones.

The IDC research indicates that as confidence returns to the small business sector, IT spending is expected to grow at a 9.7 per cent compound growth rate between 2001 and 2006. Additionally, small business market growth will increase more rapidly after 2003, said Kourosh Ghassemi, IDC senior analyst in small business.

Ghassemi cited forecasts from the recent Australian Federal Budget for world economic growth, export growth and the general strengthening of the Australian economy. "It must be noted that market maturity and technology lifecycles influence consumption of any product within a given market segment. As such, there is going to be significantly slower growth and in some cases a decline in more mature products such as PCs and printers."

The good news, he said, is that important benefits provided by software products and services will ensure that small businesses continue to make significant investments in the areas of data management, accounting software and e-commerce.

"In particular, the growing adoption levels of the Internet within this sector has resulted in a significant rise in demand for software applications that assist small businesses to service their clients' needs online," Ghassemi said.

IDC said that more than 48 per cent of the small business market value in Australia was associated with IT services and software in 2000. These segments are also the fastest growing areas and by 2006 are projected to account for over 64 per cent.

With over one million small businesses and just over a quarter of Australia's total IT spending ($6.2 billion) in 2001, the Australian small business market represents a sizeable opportunity for all vendors, according to IDC.

Ghassemi said the big winners from this increased spending will be local software producers and service providers.

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