SMBs need to invest in ICT

Canadian small and medium businesses need to think about investments in information and communication technology as a business driver rather than a cost if they want to be more productive and prosperous, according to Canadian IT and business experts.

At a roundtable discussion this month representatives from top tech firms agreed that SMBs here need to be more like their U.S. counterparts in terms of competitiveness, and that provincial and federal governments as well as vendors have to do a better job supporting them to encourage that behaviour.

“The attitude in the U.S. and the competitiveness of the U.S. market has forced a wake-up call for SMBs there to use technology as an enabler as opposed to a cost to business,” said Tom Turchet, vice-president of SMB software at IBM Americas.

But a recent study sponsored by the Information Technology Association of Canada (ITAC) and conducted by IDC Canada found that non-ICT investments such as labour, operating expenses and capital are more critical than ICT investments for SMBs.

IDC Canada surveyed 300 Canadian SMB senior business executives from firms with 20 to 999 employees.

Sixty per cent of respondents said internal business drivers will spawn future ICT investment over the next two years, the report said.

However, just under 10 per cent of SMBs said external drivers such as the need to be competitive or gain an edge in the market were incentives to make ICT purchases.

Michael Hyjek, research director, customer segments, IDC Canada, said while 60 per cent of SMBs are motivated by internal drivers to make ICT purchases, only 15 per cent are incited by technology drivers.

“SMBs have positive views of ICT,” said Hyjek, who presented his report “Does ICT matter to SMBs in Canada?” to the panel of experts. “We need to get them using it and understanding it.”

Hyjek added that SMBs face lack of staffing and staffing resources challenges.

Twenty per cent of SMBs reported they don’t have any ICT staff and 50 per cent of respondents said lack of staffing is the most significant barrier to ICT adoption.

The lack of IT spending is also reflected in other industry reports such as the Institute for Competitiveness and Prosperity.

The institute recently found that the prosperity gap between Canada and the U.S. was, in part, a result of a lack of investment by business leaders in machinery and equipment, particularly in IT.

“There doesn’t seem to be awareness,” said James Milway, executive director at the institute.

“They need support from vendors and the pressure comes from customer demand and competition.”

Peter Kerr, vice-president of marketing at Bell Canada’s small and medium business division, said SMBs benefit from a managed services approach, “so they can concentrate on their core business.”

“The challenge for us is how to make people aware of that technology,” he added.

But SMBs can’t rely on vendor support alone – the technology has to be easy to use and sold at an affordable price. Computer Associates, for example, is trying to find ways to help their customers manage security better.

IDC Canada’s study found that security ranks at the top of the list in terms of SMBs’ priority investment over the next 12 to 18 months.

“They can’t sit back and wait for the next virus or spyware attack to hit their environment,” said Pino Base, vice-president of business development at CA Canada.

“Customers want products that are simple to get up and running and maintain.”

ICT spending is also hampered by corporate taxes imposed on businesses, added Milway.

“The way we tax in Canada is pretty dumb,” he said, pointing to Sweden as a model example because its government doesn’t tax businesses but charges a much higher tax rate to its citizens.

The Canadian government “has gotten away with it because of our neighbours to the south.”

Bernard Courtois, president and CEO of ITAC, said Canada should look to programs for its SMBs like those in the U.K. that give businesses incentives to invest in technology.

“How do you actualize a wake-up call? You do something that people will take note of.”

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Jim Love, Chief Content Officer, IT World Canada

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