SMEs Mainly Focus on IT Hardware Spending
The largest IT-related expenditure item for Taiwanese SMEs in 2005 was human resources, followed by spending on software, hardware, and communications. The survey results show that IT hardware purchasing and maintenance is still the main focus of SMEs' IT expenditure.
Nearly 35% of Taiwanese SMEs spent more on IT in 2005 than they did in 2004; around 50% spent roughly the same amount. The percentage of SMEs spending more on IT in 2005 than in 2004 was highest in the import / export trade industry, the general manufacturing industry, and the IT and electronics industry; the wholesaling and retailing industry had the highest percentage of SMEs where IT expenditure remained flat in 2005.
Overall, only around 20% of SMEs expected to spend more on IT in 2006 than they had in 2005. SMEs in the wholesaling and retailing industry were the most likely to anticipate a rise in IT spending in 2006. Broadly speaking, SMEs in Taiwan anticipated that spending on education and training, IT-related human resources, and communications would remain flat in 2006. Nearly 20% of SMEs expected to spend more on IT hardware in 2006 than they had in 2005; 15% expected to spend more on software. Demand for IT hardware and software thus remains relatively high.
SMEs' Demand for Software Aims at ERP and CRM
Financial and accounting systems and inventory management systems are the software items in most widespread use among SMEs. Adoption of BI and e-learning applications by SMEs has been limited.
The software items for which SMEs will have the most demand over the next three years are ERP and CRM systems. Demand for ERP software will be slightly higher in the import / export trade industry and the general manufacturing industry than it will in other industries; demand for CRM and SCM systems will be highest in the wholesaling and retailing industry and in the import / export trade industry. The import / export trade industry and the IT and electronics industry will have slightly higher demand for BI software than other industries; demand for e-Learning software will be highest in the "other industries" sector. While demand for e-Learning software among SMEs as a whole remains low, there is still some business opportunities in the market presented by the "other industries" sector ?which includes the construction / engineering industry, the banking and investment industry, the information services industry, the transportation, warehousing and communications industry and other service industries. Demand for EIM is slightly higher in the IT and electronics industry, the import / export trade industry, and the "other industries" sector than in it is in other industries.
Taiwanese SME WLAN Penetration Reaches 40%
ADSL / cable modem is the main Internet access method used by Taiwanese SMEs. Nearly 40% of SMEs have established a WLAN network, but of the 60% that have not yet set up a WLAN network, relatively few are planning to do so within the next three years. The factors that are discouraging SMEs from establishing WLAN networks include price, security issues, and problems with inadequate bandwidth. However, as wireless technology matures, those service providers that understand SMEs' needs and are able to develop WLAN products with superior security features may be able to achieve significant sales growth in the SME market.
The industries where the percentage of SMEs that have already established a WLAN network is highest are the "other industries" sector, the IT and electronics industry, and the import / export trade industry. The "other industries" sector has the highest percentage of SMEs planning to establish a WLAN network within the next three years; the next highest percentage is found in the import / export trade industry.
75% of Taiwanese SMEs have their own website, and just under 30% have established an EIP. The industries where the percentage of SMEs that have already established a website is highest are the IT and electronics industry and the import / export trade industry; SMEs in the import / export trade industry will have the highest demand for website establishment over the next three years. The highest rates of EIP establishment are found in the import / export trade industry and in the "other industries" sector. The highest demand for EIP establishment over the next three years will also be in the import / export trade industry and in the "other industries" sector.
System Maintenance Accounts for Largest Share of IT Outsourcing
55% of Taiwanese SMEs are already making use of IT outsourcing. 10% of SMEs spent more on IT outsourcing in 2005 than they did in 2004; 90% of SMEs anticipated that their spending on IT outsourcing in 2006 would be roughly the same as in 2005.
In both the IT and electronics industry and the "other industries" sector, more than 10% of SMEs spent more on It outsourcing in 2005 than they did in 2004, a slightly higher percentage than was the case for other industries. However, in all industries, IT outsourcing spending remained unchanged in 2005 in 80% to 90% of SMEs. SMEs in all industries anticipated that IT outsourcing spending growth in 2006 would be less than 10%; the lowest percentage was found in the wholesaling and retailing industry. Overall, Taiwanese SMEs are becoming more conservative in distributing IT outsourcing expenditure.
Currently, IT services that are outsourced the most are application system and website development and maintenance, along with information security management. It is anticipated that these items will maintain their status as the most widespread IT outsourcing services for the foreseeable future. Over 25% of Taiwanese SMEs believe that IT outsourcing can improve their operational performance; nearly 20% feel that IT outsourcing helps reduce their IT spending. However, SMEs continue to experience problems with IT outsourcing, with the most serious issues being poor communication with outsourcing service providers, information security risk, and unsatisfactory quality control on IT outsourcing service providers. These factors will play an important part in determining whether IT outsourcing adoption continues to increase over the next few years.