SMEs to Prioritize Overall IT Cost Reduction as Top Business Goal, says IDC

Manila, November 21, 2008 - Based on IDC's "Philippines Small and Medium-Sized Enterprise IT Buying Behavior and Adoption Plans" ( Doc# PH383103Q) survey, reducing the overall cost of IT is the most vital IT infrastructure need of the majority of small and medium-sized enterprises (SMEs) in the country. Firms are now seeking to reduce costs by maximizing the use of its current IT infrastructure and reducing operational inefficiencies. This is in parallel with SMEs’ key business goal of reducing cost structure in its organization. Results of the survey also point out that SMEs are also prioritizing business expansion in its current markets and new geographic markets as a main business goal.

"Cost reduction through improved business processes will be the key incentive for SMEs to undertake further IT adoption. Building strong customer relationships through a well-informed sales team coupled with a solid after-sales support will ensure business continuity with their SME clients. A paradigm shift in their IT expenditures illustrate that more firms are recognizing the importance of IT integration in their business processes. Likewise, SMEs in the country are becoming more meticulous in their IT spending, looking beyond price considerations and focusing much on the products' capacity to meet its requirements," says Bianca Pearl Sykimte, associate market analyst, IDC Philippines.

IDC’s survey of SMEs’ IT buying behavior highlights that more firms are now turning to computer stores and retail outlets as their most preferred source of information about new IT products and services. Computer stores and retail outlets provide convenience and accessibility to SMEs who deem it necessary to see the actual products prior to purchase.

Ensuring that every dime is well spent, SMEs make sure that expenditures on IT products and services meet their specific requirements. Desired features and capabilities are the topmost considerations of SMEs in IT spending. As these SMEs would normally lack solid in-house expertise, most firms deemed it necessary to see the actual products. Thus, more SMEs now turn to computer stores and retail outlets to learn about new IT products and services.

Figure 1. Influential IT Purchase Factors

Figure 1

Influential IT Purchase Factors

Q. On a 5 point scale where 1 is least influential and 5 is most influential, please rate how the following affect your company's decision to purchase IT products.

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Source: IDC's Continuum Survey, 2008

SMEs are likely to exercise some caution in their IT spending as firms are taking a "wait-and-see" approach on the effects of the global economic slowdown on their businesses. Thus, it is essential for vendors and service providers (SPs) to continue creating specialized products and packages best suited for the SMEs' respective industries to be able to capture the market. Products and services should be customized to address the key issues in the SME segment which is currently - the reduction in the cost of IT. Continued investment in retail arms and strong channel relationship and after-sales support delivery are key areas vendors should focus on in the next 12 months.

Contact

For more information, contact:
Bianca Pearl Sykimte
Associate Market Analyst
Tel: +632-889 7066
Email:bsykimte@idc.com

Sasithorn Sae-iao
Events & Marketing Executive
Tel: 66-2651-5585-87 Ext. 113
Email:sasithorn@idc.com