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Story URL: http://www.silicon.com/research/specialreports/sme/0,3800004380,39159993,00.htm

Small businesses ignore IT at their peril
Many still don't see the point of email or internet access

By Steve Ranger

Published: Thursday 29 June 2006

Many small businesses don't see the point of spending money on IT - and risk losing out to larger competitors which are willing to go high-tech.

One in four small companies - those with less than 50 employees - admits to finding it hard to keep up with changing technologies, according to a recent survey commissioned by Lloyds TSB Business. More than one in 10 (13 per cent) still don't use email and nearly a third (30 per cent) eschew the internet. Nearly one in five said technology has taken the 'personal touch' out of working relationships, according to the research.

Only a third of small companies use the web to generate business and only 28 per cent said investment in IT has helped them develop new markets.

But even if they aren't up to speed on the latest gadgets, two-thirds of small businesses admitted they would not be able to operate without their current level of investment in IT - and nearly half said using IT had helped them cut costs.

Half of the small businesses surveyed had spent less than £5,000 on IT - including computers, software and internet connections - over the past 12 months. Companies in the business services sector were the biggest spenders, with a quarter spending more than £20,000 over the past year, compared to only 17 per cent of manufacturers - and five per cent of retailers.

Lloyds TSB Business head of communications Stephen Pegge said small businesses have been slow to wake up to the opportunities that technology can present for purchasing, production and distribution - and may be at a disadvantage when up against more tech-savvy competitors.

The research concentrated on interviews with 104 businesses with fewer than 50 employees.