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SMEs don't invest enough in tech

EC taskforce warns of spending shortfall, as Microsoft admits software for small businesses is 'just too expensive'

Small businesses are failing to invest sufficiently in technology, causing them to lose productivity, according to a European Commission taskforce report.

The ICT Taskforce, whose membership includes technology giants such as Microsoft and IBM, have claimed that small businesses are not investing in business technology that could improve business processes.

"A wider integration of ICT by businesses throughout Europe would significantly contribute to improve effectiveness and productivity and could potentially revolutionise and maximise processes and organisations in a number of key sectors," said the report.

Some members of the taskforce are IT vendors who stand to benefit if SMEs spend more on technology. However, it appears they may realise that they need to change their own approach in some areas. Jean Philippe Courtois, president of Microsoft International, told ZDNet UK that the software to improve business processes has been too expensive for SMEs to run.

"We have to make it easier to invest. The software is just too expensive," said Courtois. "There's a general lack of investment [in technology among SMEs]. In France, 30 percent of small businesses don't have a website. Most SMEs use web mail and browsing, but they're not at the level they should be to compete with other companies," Courtois added.

Customer relationship management applications and software that monitors key business transactions are not being used enough by SMEs due to the expense and lack of trained staff, according to Courtois.

"Many companies with fewer than 10 people don't have an IT staff," said Courtois. However, as third-party support services — which are themselves a technology opportunity for smaller companies  — and software become less expensive, the situation could improve. "As solutions come down in price many SMEs will take these up," said Courtois.

Small businesses involved in technology also need to look beyond Europe, the taskforce argued. Although currently Europe has a third of the global technology market place, the EU market is becoming more static.

"You have to sell outside Europe," said Courtois. "SMEs can connect the dots between start-ups and global products."

European governments can help small firms by encouraging public and private partnerships to fund innovative research and development, and by making public sector procurement processes simpler, said Courtois.

"It's hard for SMEs to access the public market in different parts of Europe, as there's no unifying policy," said Courtois. "There still needs to be a simplification of procurement. There's no easy way for small companies to respond and be considered because of bureaucracy and the level of details required. The process is too complex — payment and selection procedures don't help SMEs. Payment can take nine months — that could kill a small business."

Courtois also called for policy makers to consider an EU-wide education policy to raise the profile and skills set for ICT.

"Europe hasn't done enough to provide an end-to-end curriculum, from primary and secondary education through to retirement age. Something we need to do much better is use e-learning to assess proficiency levels," said Courtois.

Microsoft called for greater interoperability between technology products to encourage SME take-up. The company itself, though, has been engaged in a long-running battle with the European Commission over access to its server interoperability protocols. The EC ordered Microsoft to hand over these server technical specifications in 2004 as part of an anti-competition ruling. Microsoft provided the technical specifications this month.

"Interoperability is key for us as a company," said Courtois. "[Providing server technical specifications to the EC] is a super-complex process — we had 300 engineers working on it. It's not a case of just publishing the specifications — it's very hard to do."