European SME investment in IT is expected to rise from $76 billion in 2002 to $109 billion in 2006.
The SME sector has survived the effects of the economic downturn better than most enterprise markets. Ironically this could be due to their previous lack of investment in technologies and general reticence to spend on IT processes they see as non-essential.
As a result the interest in the SME IT services sector by vendors and service providers is beginning to build momentum. Some are committing serious parts of their budget to targeting this sector, as they see a genuine opportunity.
SMEs are actively starting to look for ways in which they can use technology for efficiency gains and to forge closer relationships with partners, suppliers and customers. SMEs have seen new opportunities opened up to them by the Internet, especially with their customers.
Many larger ones are seeing the benefits and logic of establishing intranets and extranet networking connections for the purposes of knowledge management, time saving and to improve communications by keeping employees and business associates up to date.
The SMEs in Western Europe are fairly advanced in terms of hardware and infrastructure with companies having voice capabilities and PCs, so their IT spend has shifted towards software, telecoms and IT services. Investment by SMEs in IT services will demonstrate the greatest growth with an expected CAGR of 13% between 2001 and 2006.
Channel partnership is the most important aspect of the vendors’ strategy for selling to SMEs. Large vendors can provide the value-add services that the telcos so desperately need to increase market share. The value proposition of the vendor is wide-ranging. They can offer services complementary to the technologies, a prior understanding of the SME market, a network of business partners, joint marketing and a presence and knowledge at territory level.
Related research: Datamonitor, SME networking opportunities: Strengthening channel strategies and offerings (DMTC0835)
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