SMALL and medium-sized businesses (SMBs) in Singapore are on track to spend as much as US$2 billion on information technology in 2008, up a healthy 7.6 per cent from this year, according to the latest study by New York-based Access Market International (AMI) Partners Inc.

This growth in spending is lower than what the region as a whole will achieve, but is considered healthy for Singapore which is a mature economy.

The research agency said that in the Asia-Pacific, excluding Japan (APEJ) region, IT spending by SMBs this year will reach as much as US$95.8 billion, up some 14 per cent over last year. AMI defines SMBs as commercial enterprises with up to 1,000 employees. Four key countries in the region - China, India, South Korea and Australia - lead the pack.

The study found that the combined spending of these four countries alone will account for more than 70 per cent of total IT spending across the Asia-Pacific in 2008.

"Investments in emerging markets like China will continue to surge on the back of the run-up to the Beijing Olympics," Nishant Dave, Singapore-based research director at AMI Partners, told Biz-IT.

"Although government investment post Olympics is expected to tighten further, 2008 will remain a strong growth year for China especially in key vertical sectors such as manufacturing and professional services."

The other big market in the region, India, will be the fastest growing major market in the SMB space with IT spend set to grow over 20 per cent in 2008 to US$9.6 billion. Strong traction in key vertical sectors such as services, banking, financial and manufacturing will drive the growth in SMB spend in India, Mr Dave noted.

The AMI analyst noted that overall, 2008 is expected to be a strong growth year for SMB IT investments in Singapore as well as the Asia-Pacific region.

"Although year-on-year growth in IT spend will be marginally lower in 2008 over 2007, 2008 will offer new opportunities for investments among IT vendors, suppliers and service providers to look at SMB markets as their source for business growth in the region."

Speaking about the Singapore IT spending of SMBs, AMI Asia-Pacific vice-president, Raju Chellam, said the bulk of the spend will come from three key sectors - professional services, retail/wholesale and manufacturing - which will account for over 60 per cent of overall IT spend in 2008. Since 2004, Singapore-based SMBs have been investing heavily in wireless connectivity solutions.

"SMBs in Singapore have invested more than US$400 million on wireless connectivity solutions since 2004, including wireless LAN (local area networks), VPN (virtual private networks) and WAN (wide area networks)," Mr Chellam noted.

He added: "Coupled with aggressive branch office plans, Singapore SMBs are looking to implement solutions that will enable them to keep in contact with remote locations while simplifying the management of inter-office moves and facilitating smooth employee relocations."

Singapore is aggressively pushing to make wireless access available in public spaces, with hundreds of cafes, fast-food restaurants, libraries and the airport already offering wireless hotspots. Government initiatives like the plan to provide free wireless broadband access - called Wireless@SG - bodes well for small businesses, Mr Chellam noted.

Nearly 60 per cent of them have an average of two mobile employees who travel for business at least four to five days a month. That is equivalent to about 115,000 employees that need to remain productive on the road.

Other initiatives such as the announcement around the Next-Generation Broadband network will further strengthen the IT infrastructure foundation which will help service providers in offering innovative products and solutions to Singapore SMEs so that they can gain a competitive edge over their counterparts across Asia.

"One area of SMB investments in 2008 will centre on the usage of service delivery models," added Mr Dave.

"Usage of software-as-a-service (SaaS) will gain broader adoption among SMEs in the region."

AMI expects a 24 per cent year-on-year growth in the number of businesses adopting hosted applications - which translates into 200,000 new businesses planning to opt for SaaS.

In Singapore, this growth will be strong - at about 14 per cent - with nearly 3,000 new SMBs planning to use hosted applications.

Another hot area: emergence of service providers offering a whole gamut of services - including security services, storage services, and remote management of their IT infrastructure - to SMBs and large enterprises.

Managed security services among SMBs in the region will grow by 31 per cent in 2008 to US$83 million. AMI expects that these service providers will offer a new route for the entire enterprise landscape to acquire some of the much needed IT infrastructure in the form of a pay-per-use model - available on a monthly or annual fee basis.

Among medium-sized businesses (companies with 100 to 999 staff) in Asia, nearly 35 per cent of IT spending will be on computing hardware which includes PCs, servers, printers and other related hardware. Another 30 per cent will be spent on IT services.