Asia's SMB tech hotspots

Small and medium-sized businesses (SMBs) in the Asia-Pacific region are typically cautious when it comes to IT spending, but market studies reveal that many are beginning to understand that IT can play a bigger role in their business.

US-based Access Markets International (AMI) Partners, a consulting firm specializing in SMB tech research, projects that SMBs in the Asia-Pacific region will spend about US$17.7 billion on IT services in 2009. IT services here encompasses all areas of IT support, from basic computing and networking to more complex areas of IT management and consulting.

So where are SMBs investing their tech dollars today? As different countries are at various stages of technology adoption, IT investment patterns vary across the Asia-Pacific region.

For example, since Thailand and Indonesia are still in the early stages of IT adoption, much of the investments continue to be dedicated towards building basic IT infrastructures, such as installing PCs and getting connected to the Internet. From 2004 to 2009, investment in IT is expected to grow at a compound annual growth rate of over 20 percent for both countries. AMI-Partners estimates that between 50 percent and 60 percent of their spending will center on procuring basic computing hardware such as computers and printers.

In Vietnam, the SMBs there are forecast to spend US$263.3 million on computing infrastructure this year. Out of the total 730,000 small businesses in Vietnam, a mere 11 percent use PCs. However, more than 40 percent of these small businesses have plans to purchase PCs in the next 12 months, according to AMI-Partners.

At the other end of the spectrum, newly industrialized markets such as South Korea are already boasting of high PC penetration rates and widely available Internet access. Korea's SMBs are forecast to spend US$1.65 billion on beefing up their Internet infrastructure this year, accounting for up to 13 percent of the total IT and telecom spending there, said AMI-Partners.

Indeed, Korea has emerged as the most prominent emerging superpower in IT spending and particularly in Internet adoption. The country's SMBs foresee the Internet as a strategic growth driver to enhance their competitive position, rather than just an economical channel for communication. High-speed bandwidth and Internet security are among the top IT focus areas for Korea's SMBs. According to a recent AMI-Partners' report, high-speed Internet such as DSL, ISDN and cable modems are now becoming commonplace.

SMBs across the Indian subcontinent are set to spend a whopping US$7.7 billion to beef up their info-tech infrastructure, up 26 percent from last year.

Similar patterns
While the level of IT investment varies across the region, there are certain consistent IT trends that shape these SMB markets.

According to AMI-Partners, most SMBs plan to spend money on hardware--both servers and PCs--as well as increasingly high-speed bandwidth.

Another hot growth area in 2006 is IT storage. As SMBs progress through the different stages of IT adoption, the amount of digital data increases in tandem. Therefore, selecting the right storage technology enables better asset utilization, said AMI-Partners.

According to the research company, storage expenditures among India's SMBs are forecast to grow 44 percent this year, and the growing volume of data and data security are two key factors driving the demand for storage there.

Security is another big focus across the region, driven partly by the constant news of security threats in the media, said AMI-Partners. For example, in India, SMBs are planning to invest about US$133.6 million on IT security this year--a significant increase of 53 percent over 2005.

Strong emphasis is also being placed on IT security in Singapore. SMBs are forecast to spend US$46 million on IT security this year, up 20 percent from in 2005. Investments in network firewall/VPN (virtual private network) will account for close to one-quarter of total IT security spending, said AMI-Partners.

However, the fastest growing spending will come from intrusion detection. About 96 percent of Singapore SMBs have access to the Internet and are, therefore, highly exposed to security attacks via e-mail, instant messaging, Web casting, online procurement and VoIP (voice over Internet Protocol) calls, said AMI-Partners.

Cordelia Lee is a freelance IT writer based in Kuala Lumpur, Malaysia.