CONSIDER this: Small and medium enterprises (SMEs) are set to invest a whopping US$12.5 billion this year to strengthen their IT infrastructure across key countries in Asean - Singapore, Malaysia, Indonesia, Thailand, Philippines and Vietnam.

Mr Chellam: Says the top three priorities for SMEs across Asean for IT spending this year will be computing, Internet and IT services

This is up 17 per cent over last year's IT infrastructure investment of US$10.7 billion across the region. Despite this, the bulk of SMEs are nowhere near maximising the potential of their IT spending.

Most SMEs in Asean countries have personal computers, access to Internet connectivity, and the standard office productivity tools, mostly from Microsoft. However, beyond standard and low-level usage of word processing, spreadsheets, presentations and e-mail, SMEs have not been able to capitalise on the other features that are available - either from lack of training, lack of interest, or both.

According to the latest study by Access Markets International (AMI) Partners, the top three priorities for SMEs across Asean for IT spending this year will be computing, Internet and IT services. The top three countries which are leading in IT spending in the SME space are Indonesia, Malaysia and Singapore.

These countries together contribute to over 66 per cent of the SME IT spend in Asean. For this year, that translates to a huge US$8.25 billion.

As for the rest of Asean, Thailand will see IT spend among SMEs grow at nearly 17 per cent, while the Philippines will see IT investments grow at a faster 18 per cent this year. The top spot will be Vietnam, which will see IT spend grow at a scorching 24 per cent over last year, albeit from a smaller base.

Small businesses, defined as commercial companies with under 99 employees, will account for up to two-thirds of Asean's total IT spend this year. Among small businesses, most companies are either start-ups or small outfits with staff of less than 10.

These small businesses will focus the bulk of their IT investments on computing, which essentially consists of PCs, servers and printing equipment.

Based on their small size, their need to grow fast, coupled with ubiquitous cash-flow problems, small businesses don't allocate a lot of money for IT security, storage and networking solutions.

SMEs in Singapore are more mature than their counterparts in Vietnam, Indonesia and Thailand. That's one reason Singapore's growth in IT spend is less than its neighbours.

SMEs in Singapore are spending incremental amounts to reinforce their IT infrastructure, while in countries like Thailand and Indonesia, a lot of SMEs are just starting to invest in IT infrastructure. This accounts for the high rate of growth in IT spending in the two countries.

But here's the crunch. According to straw polls, SMEs confessed to using less than 10 per cent of their productivity suite's features.

Most of them are equipped with various versions of Microsoft's Office software package, but most admitted to using only its most basic features.

There is also little awareness about the advent of online, Web-based productivity applications from companies such as ThinkFree and Zoho, and more recently, from IT giant Google.

These cost-effective online tools are challenging Microsoft's dominance in desktop productivity solutions, especially in the cost-conscious SME segment.

However, this lack of awareness of online productivity tools is not confined to Asean. A recent AMI survey across the US, Britain, Brazil and India found that many small businesses are unaware that online personal productivity solutions are even available.

In fact, 38 per cent of small businesses in the US, 50 per cent in Britain, and 53 per cent of India respondents were not aware of an alternative to Microsoft Office. 'In addition, inertia, potential security threats, and possible incompatibility between online documents and PC software serve as inhibitors to small business' adoption of online personal productivity solutions,' the AMI report points out.

Productivity tools are especially important in Asean because the top three vertical segments - manufacturing, professional services and retail - need to make maximum use of office productivity tools to stay ahead of the competition. Indonesia, Vietnam and the Philippines, for instance, have a major portion of manufacturing SMEs.

The paradox: SMEs in the manufacturing sector in these countries are barely equipped with PCs and printers, and quite a few don't even have this basic IT infrastructure.

However, with their economies on the upswing, SMEs in the manufacturing sector are flourishing. This, in turn, is pushing them to invest more in IT infrastructure this year.

What would drive small businesses to adopt online productivity applications? A sizable percentage of respondents cited time and cost savings, mobility and ease of use as key benefits of using online applications.

Small businesses are also more likely to consider online services given certain cost and pricing breaks.

A high percentage of users are willing to accept advertising in exchange for free use of online personal productivity software, and a significant number would choose the online route given a large enough pricing advantage over desktop solutions.

Businesses also indicated strong interest in hybrid solutions that provide flexible access via both desktop and Web interfaces.

The debate here is not whether online office productivity tools are better than desktop alternatives. The crux of the matter is that SMEs need to equip themselves with the skill sets required to make maximum use of their IT investments.

Office productivity tools offer a wealth of features to speed up processes, to automate tasks, brighten up presentations, and add bells and whistles where required.

Among all businesses, SMEs are the least equipped with the know-how when it comes to buying office productivity tools and as a result, they are not able to use them to gain the fullest benefit.

In this highly competitive, globalised e-marketplace, this short-sighted behaviour is nothing short of slow corporate suicide.

Raju Chellam is vice-president (Asia-Pacific) with Access Markets International (AMI) Partners Inc .

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