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Technology in SMBs

Ninety-eight percent of SMBs own a computer of some description, which is unchanged from 2016.

Among SMBs ownership of desktops, notebooks and tablets is 95%, 55% and 37% respectively. Ownership of desktops and notebooks was slightly higher this year but tablets are continuing a downward trend. Each of these devices remains more prevalent in medium size businesses than small businesses, which also applies for other types of technology such as smartphones, Local Area Networks (LAN), satellite navigation, VOIP (Voice Over Internet Protocol), advanced telephony systems and even standard telephones without internet access. Many firms continue to rely on a range of these devices.

SMB expenditure in 2016 on both hardware and software averaged almost $8,000, which was less than the year before at $9,100. For 2017, expectations for expenditure averaged almost $9,000, which compares with $8,300 last survey. The average expenditure expectations of medium size businesses again greatly outweighed those recorded for small firms – almost $54,000 compared to just over $7,300.

SMBs online

Ninety percent of SMBs are connected to the internet, which is three points lower than last survey. Internet connectivity remains at 99% in medium sized businesses compared to 90% in small businesses.

Slightly more SMBs using the internet have a broadband connection (up from 87% to 89%). However, falls were recorded in ADSL accessibility (down 13 points to 44%) and wireless accessibility (down four points to 50%) in favour of cable (up 15 points to 34%) or NBN (up seven points to 15%). Five percent of SMBs claim their online presence has been influenced by the NBN and 10% expect this will be the case in the foreseeable future, primarily because of faster internet access.

Email and internet banking remain the most popular online behaviours with each used by more than nine in ten SMBs with the internet. A majority also use the internet to pay for purchases (78%), access directories such as the Yellow Pages (70%), to seek information about products and services (68%) or suppliers (67%), and to place orders (52%). Solid growth is foreseen for each of these applications over the next year.

Only 40% of businesses currently take orders for products and services over the internet but in the next year almost three in 10 (29%) expect to add this service for their customers. Use of the internet for marketing purposes should also grow markedly in the next year. More specifically, an extra 20% expect to be monitoring markets or competition (currently undertaken by 33%) and an extra 25% intend to be promoting the business via email marketing (currently 25%).

Consistent with prior surveys, email communication (93%) and internet banking (83%) are the two applications considered the most essential by online SMBs. Paying for products and services (66%) is next most likely to be considered an essential application. Small and medium sized businesses do not differ much in this respect.

SMB websites

Fifty-two percent of SMBs have a website which compares with 61% in 2016. While the number of businesses with a website was down, those with another form of internet presence was up (from 28% to 80%), as was the number with a social media presence (up from 10% to 54%).

Websites are far more common in medium sized businesses than small businesses – 90% compared to 50%. A further 6% of online SMBs that use the internet intend to develop a website within the next year and nearly all are small businesses.

Fewer SMBs with websites believe this has improved the effectiveness of their business – down from 60% to 50%. The main positive impact businesses see from their websites continues to be increased exposure to the market.

Expenditure on building and maintaining their website averaged $2,800 for SMBs in 2016, which was down from $3,300 the year before. As in the prior two surveys, the annual average is more than three times higher in medium sized businesses ($8,800 approximately) than small businesses (just over $2,400). Expected average expenditure by SMBs on websites for 2017 is slightly above $3,400.

Thirty-five percent of SMBs have optimised their website for mobiles and other devices. This has occurred to a slightly greater extent in medium sized businesses (39%) than small businesses (34%). Nearly one quarter (23%) intend to optimise their website in the coming year, with medium sized businesses more likely to do so than small businesses (35% compared with 22%).

Just over three in ten SMBs (31%) with an existing website upgraded it in the last year.

SMB buying and selling online

Forty-seven percent of SMBs make purchases online. The rate is much higher in medium sized businesses (69%) than small businesses (46%). On average, 48% of the total procurement of SMBs who purchase online was purchased over the internet, which is up three points on 2016.

Hacking remains the biggest concern that SMBs have about e-commerce, with more rating it as a major concern (up two points to 37%) or minor concern (up 10 points to 44%). Greater levels of concern were also expressed this survey about other e-commerce related issues such as incompatibility with existing systems, lack of personal contact with customers and the costs of hardware and software.

SMBs’ use of online advertising and other applications

Forty-eight percent of online SMBs advertise on social networks, which has increased from 34% in 2016. Nearly half (up 15 points to 47%) now use cloud computing. Online advertising and unpaid search engine optimisation have become markedly more prevalent as well (both up 13 points to 45%).

Other applications did not grow much, if at all, and were mentioned by less than one in four SMBs – video conferencing (22%), VOIP (21%), paid search engine marketing (15%), mobile applications (9%) and mobile advertising (7%).

A majority of SMBs believe it’s important to be on page one of a Google search with 21% saying it’s very important and 34% saying this is somewhat important.

Digital business strategies

LSixteen percent of online SMBs reported having a digital business strategy, which is three points lower than last year. There was also a three-point drop (to 4%) in the proportion of SMBs who have developed a mobile application or “app” for their business.