SMBs Missing Internet Opportunity

Small businesses may not be embracing the opportunities the Internet offers them, and the reason may be a lack of the proper tools, and the traditional concerns of cost and security.

A survey of small and medium businesses (SMBs) conducted by The Yankee Group illustrates that the overwhelming majority of SMBs have not strategically embraced the Internet as a business tool, nor do they grasp the opportunities the Internet presents to level the playing field with larger companies.

Among the small (2-99 employees) and medium (100-499) businesses surveyed by the Yankee Group, an average of only 30 percent stated that the Internet was “important to achieving business goals.” In fact, although 61 percent of small businesses and 82 percent of medium businesses report they have some form of Internet access, only 50 percent of all PCs in small businesses and 31 percent within medium businesses have Internet access, according to the Yankee Group.

A recent report by Cahners In-Stat Group showed that only 28 percent of small business Internet commerce implementers have enabled online ordering and only 19 percent accept online payments. The point: small companies may have been among the first to get on the Internet, but they are slow in moving beyond “brochure” sites.

“The chief obstacles to implementing e-commerce identified by the small businesses surveyed are cost, security concerns, difficulties in implementing and maintaining commerce sites, and customer service concerns,” said Cheryl Ball, Director of the In-Stat Group’s Internet Commerce and Applications Information Service.

According to the In-Stat report, consulting services and modular products that make implementation easy and safe may be the key to getting small business to become players in the Internet game.

The Yankee Group findings also found that small businesses have yet to move beyond a simple Web presence to an interactive site.

“We have identified a three-phase process that SMBs undergo over time as their Internet commitment strengthens — connectivity, customer connections, and commerce,” said Chris Gwynn, senior Analyst in the Yankee Group’s Internet Market Strategies program. “More than two-thirds of the companies we surveyed have yet to even move into the customer connection phase.”

According to the Yankee Group research, most companies are still in the earliest phase of Internet adoption, with only 31 percent of small and 51 percent of medium size businesses maintaining some type of Web presence. Approximately 55 percent of small businesses and 66 percent of medium businesses without Internet access have no plans to add it.

“SMBs account for 98 percent of all US businesses, represent about 50 percent of the Gross National Product, and spend approximately $445 billion annually on information technology products and services,” said Joseph Villarosa, director of the Yankee Group’s Small & Medium Business Communications program. “There is no question that service providers, as well as equipment manufacturers, have a huge opportunity to turn these companies into ‘Internet believers’ through substantial education efforts and long-term relationship building.”

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