One in seven European small to medium businesses, equal to more than 100 000 firms, are `fast-tracking` their way to Internet supremacy. These are the findings in an International Data Corporation (IDC) study commissioned by Cisco Systems. It shows that Europe`s small-to-medium enterprise (SME) sector is fostering up to 104 000 potential rivals to US Internet giants such as Amazon and Yahoo. These so-called European `Fastracker` companies are set to make a killing on the World Wide Web and outstrip traditional competitors by using their online presence to increase business, reduce operating costs and interact with customers while adding value. Fastrackers recognise that making the Internet an integral element of their overall business is no longer an option, but essential. Thanks to Internet technology, the Fastrackers can trade more cheaply and efficiently than traditional competitors and typically see their margins rocket from 5-20 percent to 20-40 percent over a 12-month period.
"These Fastrackers are powering ahead of their traditional competitors in terms of growth and profits," says Robert Lloyd, vice president of enterprise and small/medium lines of business at Cisco Systems EMEA. "Companies like `made-in-sheffield.com` in the UK and `Dressmart.com` in Sweden are inspiring many other companies to get online. Our analysis shows that European SMEs are well poised to lead Europe`s progression in the Internet Economy. They have the tools and the mind set and in many cases are not held back by process issues."
Other groups defined by the research include Internet `Enthusiasts`, companies that use their Web sites to feed information to customers; Internet `Sensitive` firms, who are aware of the need to get online; and Internet `Laggards`, who have little or no Internet experience or plans to go online. "For a long time the Internet has predominantly been a US marketplace, but Europe`s small and medium businesses are about to start changing all that," says Lloyd.
Despite the lower levels of Internet access (66 percent in the 20 - 249 employee segment compared to 76 percent of the larger companies segment), the report shows that about 80 percent of all European SMBs are already IT-enabled, challenging the view that smaller firms are resistant to technology.
These figures are different to those of the local market. According to a recent BMI-T survey, a third of SMEs do not yet see the Internet as having a strategic imperative in their business, and while around 16 percent are already conducting some form of e-commerce, 31 percent believe they will never use the Internet to conduct e-commerce between themselves and their customers.
Cisco Systems South Africa has its own views on the topic. Local channel account manager Jonas Bogoshi believes that by trading online, companies expand their channels and gain customers they would otherwise not have had. "The reality is that few SMEs are currently implementing e-commerce within their organisations. The reason for this is that many do not understand the impact this technology will have on their business."
He warns that e-commerce is no longer a `nice to have`. "SMEs which haven`t implemented the technology will lose the sale to competitors. This is both from the consumer-purchasing, as well as from the business-to-business supplier side. The Internet is critical to long-term business success and this is why Cisco is focusing on helping this market develop by providing a range of products and services to suit their needs."
Other findings for companies with 20-249 employees (Cisco`s selected sample for the study) include:
60 percent of companies across Europe have access to the Internet.
Over half of European companies with 20-249 employees have less than 30 percent of their PCs connected to the Internet.
One third of European companies with 20-249 employees have more than 60 percent of their PC`s connected to the Internet.
Internet access is lowest in retail and wholesale SMEs (with 60 percent of small and 49 percent of medium companies connected). Despite this, the retail/wholesale sector stands out in terms of the number of features per Web site and companies are increasingly aware of exploiting the transaction and service delivery potential of the Internet.
SMEs have been slower than large companies to adopt web sites - 29 of small and 38 per cent of medium firms have home pages, compared to 54 percent in larger organisations.
Banking and business services SMEs lead the way in building Web sites. 54 percent of banks and 41 per cent of business services firms in the small company category have a homer page. 46 per cent of banks and 63 percent of business services firms in the medium-sized category have a home page.
Increased competition is a major factor driving Internet adoption among European SMEs.
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