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SMBs In Australia to Spend US$1.8 B on Internet Technology This Year

August 25, 2008

Small and medium businesses (SMBs, or companies with up to 999 employees) in Australia are on track to spend over US$1.8 billion on beefing up their Internet-related technologies, up some 5% from 2007. By 2009, it is estimated that SMB spending will go up marginally to US$1.9 billion on Internet-enabling technologies, according to a study by New York-based Access Markets International (AMI) Partners, Inc.

“Over 60% of the current Internet spending is devoted to Intranet, web hosting and development-related categories, and the remainder is spent on Internet-access areas,” says Pompa Das Gupta, Analyst at AMI-Partners. “In terms of Internet adoption, Australia is one of the leading countries for SMBs who embrace this technology. The low density of population, geographic isolation from international markets and the distance between domestic population centers are key drivers forcing Australian SMBs to go online to overcome the hurdles of distance.”

In the case of Australia MBs (companies with 100 – 999 employees), website usage is likely to reach near-saturation levels as these businesses become more aware of the multiple benefits of possessing and maintaining websites. SB (companies with up to 99 employees) penetration however, is much lower; about 40% of SBs are yet to own a website. Most SMBs host their websites on ISPs or other providers’ web servers, rather than on in-house company servers.

Australia SMBs place more emphasis on website hosting/maintenance compared to website development. Intranet usage is moderate; currently, close to 30% website-owning SMBs have an intranet in place. Most prefer to host their own intranet rather than using a third-party provider. In Australia a typical MB spends approximately five times as much on an intranet as a typical SB spends. Australia MB intranet usage is estimated to reach near-saturation next year. However, SBs have a long way to go; they are likely to reach intranet penetration levels of just over 25% in the same timeframe.

E-commerce is widely accepted by the Australian SMBs as a way to make business transactions easier and simpler. The future of e-commerce in Australia looks very optimistic. With significant plans for increased activity, e-commerce is likely to be used by almost 50% of Australian website-owning SMBs by end of next year. Annual sales revenue from e-commerce transaction is likely to display an upward sloping curve – as typical SMBs expect their average annual e-commerce revenues to rise by more than 16% next year. The preferred transaction-processing method for e-commerce is using secure credit card processing methods, in addition to transactions conducted via telephone.

“Internet marketing can benefit SMBs by increasing their sales, attracting new customers, reducing advertising costs and above all improving their corporate image,” says Ms. Das Gupta. “The high GDP per capita, high adult literacy rate and positive attitude towards technology implementation are favorable factors for e-commerce adoption by more & more SMBs in Australia.”

Related Studies

AMI’s 2007 Australia Small Business Overview and Comprehensive Market Opportunity Assessment and 2007 Australia Medium Business Overview and Comprehensive Market Opportunity Assessment studies highlight these and other major trends in the context of current/planned IT, Internet and communications usage and spending. Products and services covered include established and emerging hardware, software, applications and business process solutions. Based on AMI’s annual surveys of SBs and MBs across Australia, the studies track a broad spectrum of issues pertaining to budgets, purchase behaviors, decision influencers, channel preferences, outsourcing, service and support. Also covered are detailed firmographics and critically important technology attitudes and strategic planning priorities. This data points to key opportunities and messaging hot buttons for vendors and service providers seeking to match their offerings to SMB market requirements.

For more information about this study, AMI-Partners, or our global SMB research, please call AMI-Partners at 212-944-5100, e-mail ask_ami@ami-partners.com, or visit the AMI Web site at www.ami-partners.com.

About Access Markets International (AMI) Partners, Inc.

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence–with a strong focus on global small and medium business (SMB) enterprises and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and “go-to-market” solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets, its annual retainership services based on global SMB tracking surveys in more than 25 countries, and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.




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