A NEW survey of smaller firms has found that big strides have been taken in the use of information and communications technology - but that there is still a long way to go.

Small and medium-sized enterprises (SMEs) tended to shy away from infocomm technologies in the past because they did not see any business benefit.

This has changed dramatically, with more SMEs now computerised and connected to the Internet - but applications such as customer relationship and supply chain automation are less popular.

The findings are from the Annual Infocomm Usage Survey 2007, released yesterday by the Infocomm Development Authority (IDA) of Singapore.

The survey covered 6,000 local firms with fewer than 200 employees and less than $15 million in fixed assets. It was carried out between October and January.

Back in 2006, the No. 1 reason given by SMEs for avoiding technology was the lack of perceived benefits. This response has dropped four rungs in the latest survey, below other barriers to adopting technology such as high costs, lack of know-how, security concerns and user resistance.

The good news is that, over the past year, more companies have computerised their operations - 72 per cent now, up from 68 per cent in 2006.

The most popular advanced computer software installed today is for managing accounting and finance functions.

More than half of the SMEs in Singapore now use or plan to use accounting software, partly because accurate business data is required for filing tax returns and keeping tabs on profits and losses.

But far more needs to be done.

'The question to ask, 'Is automation good enough today?'' said Ms Tan Kar Joo, a senior director of IDA's industry and cluster development group.

More than 85 per cent of SMEs still have no plans to automate key business processes such as inventory, supply chain and customer relationship management.

Costs and lack of knowledge are the key obstacles, the IDA survey found.

'The issue is not automation, but how one can differentiate oneself from competitors. One way to stand out from the crowd is through the use of customer relationship management software,' said Ms Tan. She was speaking yesterday at the Digital Life SME Forum: IT Made Easy, which attracted about 150 people.

Ms Tan announced that a new scheme called the SME Infocomm Package (SIP) would be launched next month to help SMEs overcome the barriers.

A one-stop consultancy shop, SIP will answer all the tech queries that firms have about how to develop a website or set up broadband connections. It will also offer packaged rates for IT products that are cheaper than the rates SMEs would otherwise pay.

Separately, Spring Singapore's $150 million Technology Innovation Programme, launched in 2006, helps firms cover technology consultancy costs. To date, the scheme has helped 170 SMEs.

'Given our small, open economy, it is even more vital that our SMEs leverage the Internet to expand their customer base,' said Mr Png Cheong Boon, Spring Singapore's acting chief executive, at the forum's opening address.

SMEs are crucial to Singapore's future. Local SMEs grew at 8.1 per cent last year - faster than the economy at 7.7 per cent.

The SME sector accounted for 47 per cent of economic output, employing more than 60 per cent of the workforce, or 1.7 million people.

This article was first published in The Straits Times on May 10, 2008.