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Business Demographics: Segmentation Strategies are Critical to Success in the SMB Market, Says IDC

  • 02 July, 2008 11:39

<p>SYDNEY, 2 July 2008. A new report from IDC reveals that in February 2008 there were 842,000 businesses in Australia employing 10.6 million people. ICT vendors are increasingly considering the small and medium-sized business (SMB) sector as the next frontier to conquer and must determine what segmentation strategies work best in such a fragmented and diverse sector.</p>
<p>The report titled, Australia Business Demographic Structure and Performance Indicators, 2008 shows SMBs, with less than 500 employees, represent 99.8% of businesses, 65% of revenue and 58% of employees, but only 45% of the overall business ICT spending. There are only around 1,500 businesses employing more than 500 staff, these organisations represent 35% of revenue, 42% of employees and 56% of ICT spending in Australia.</p>
<p>"The SMB business sector in Australia is distributed between a highly fragmented small segment (1–99 employees) estimated at 829,300 businesses and a more identifiable medium-sized segment (100–499) of around 11,400 businesses. For ICT vendors eager to find growth in the SMB sector (as the enterprise sector is becoming increasingly saturated), the mid-sized segment represents the best opportunity thanks to a higher profitability than in the small segment," says Jean-Marc Annonier, IDC's Research Manager for Small and Medium Business Markets.</p>
<p>"Segmentation strategies are a critical factor of success in the SMB space, and ICT vendors need to define precisely their target markets in terms of business size, vertical industry, and regional segmentation," adds Annonier.</p>
<p>This IDC study presents business demographics (employees, number of entities), performance indicators (revenue, profit) and total information and communication technology (ICT) spending per business size, vertical industry and state.</p>
<p>The IDC study also finds that:</p>
<p>- Targeting specific industries is critical to success. For example, the most populated vertical industry in SMB is "business services," with more than 235,000 entities; however, these businesses tend to be very small as 60% of them have less than five employees. Targeting a more specific vertical industry such as manufacturing that counts around 1,100 businesses with 100 to 499 employees would be much more efficient as campaigns would be better focused.</p>
<p>- ICT spending increases with the business size. The return on ICT investment is much higher in larger companies, as large-scale business processes can be better optimised with technology. The substitution capital to labour is stronger in larger businesses, as capital is much more productive than labour due to economies of scale.</p>
<p>- The dominant states remain New South Wales and Victoria. However, Western Australia and Queensland experienced strong economic growth and are closing the gap on the leading states; as a result, they are expected to enjoy a stronger ICT spending growth than New South Wales and Victoria.</p>
<p>On IDC’s website, www.idc.com, this media release relates to document #AU381106Q, Australia Business Demographic Structure and Performance Indicators, 2008</p>
<p>Ends</p>
<p>For press enquires please contact:
Jean-Marc Annonier
Research Manager, IT Spending, IDC
+61 2 9925 2221
jannonier@idc.com</p>
<p>Sally Taylor-Phillips
Marketing Communications Manager, IDC
+61 2 9925 2234
staylorphillips@idc.com</p>
<p>About IDC
IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends covering over 110 countries worldwide. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com or www.idc.com.au.</p>
<p>During 2008, IDC is celebrating its 30th birthday in Australia.</p>

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